Wall Street litigation leads to important workplace reforms

Bank of America agreed on Friday to pay $39 million to women who worked in its Merrill Lynch brokerage operation, another costly settlement of a discrimination case filed by its employees.

The agreement, filed Friday evening in a federal court in Brooklyn, was the second by the nation’s largest bank over 10 days. Last week, Merrill Lynch told a federal judge in Chicago that it would pay $160 million to settle an eight-year-old racial discrimination suit filed on behalf of 700 black brokers.

With the new agreement, Merrill will have paid out nearly half a billion dollars to settle employee discrimination claims over the last 15 years.

The case settled on Friday was originally brought by women who had worked in the brokerage division of Bank of America, but it was amended to include women who were brokers at Merrill Lynch after the bank bought Merrill. The money is expected to be divided among as many as 4,800 current and former employees of the two brokerage operations.

Merrill, which has about 15,000 brokers worldwide, also agreed to change its policies to give women a better chance of succeeding. The firm will bring in an applied organizational psychologist to study some of its policies, particularly how teams of brokers are formed and how they share customers’ accounts.  A Merrill spokesman said in a statement that the settlement “includes a number of additional and enhanced initiatives that will enrich our existing diversity, inclusion and development programs, providing even more opportunities for women to succeed as financial advisers.”

Merrill has a long history of litigation over its treatment of women and minority employees. In the 1970s, the firm settled a discrimination suit by consenting to make its work force more diverse but never met that goal.

Two decades later, Merrill settled another class-action suit brought by women who worked at the firm and led by a plaintiff named Marybeth Cremin. Merrill settled that suit, known as the Cremin case, in 1998 by agreeing to a process for settling disputes with more than 900 women who filed claims. Otherwise, each of the women would have had to take her claim to industry-sponsored arbitration — a standard agreement in employment contracts on Wall Street.

Merrill ended up paying about $250 million to settle the claims in the Cremin case. It also agreed to make changes to give female brokers a better chance of succeeding in the male-dominated brokerage business.

Less than 10 years later, three women who worked in Bank of America’s brokerage business contended that they faced the same sorts of obstacles that Ms. Cremin had cited at Merrill. They first took their complaints to the federal Equal Employment Opportunity Commission in 2007.

In 2010, they sued Bank of America for practices at both the bank and Merrill Lynch. Judy Calibuso, one of the lead plaintiffs, was a longtime broker for the bank and now works for Merrill Lynch. Another lead plaintiff, Julie Moss, said that “this settlement will advance our efforts to foster diversity and professional success within the work force.”

“Speaking generally of the industry, there have been changes that have attempted to address the gender disparity that exists, but it hasn’t solved the problem,” Plaintiff’s counsel said. “It’s still a well-known secret that women make less than men on Wall Street, and that’s true in the financial advisory world. We think the settlement is a great settlement that increases opportunities for women at Merrill Lynch going forward as financial advisers.”

Pay gap between men and women narrowing

According to the latest numbers released by the Bureau of Labor Statistics (BLS) last week, based on the weekly earnings of full-time wage and salary workers, women now earn 82 percent as much as men – up from 64 percent in 1980.

In recent discussions of the wage gap, a different figure – 77 percent – has been widely cited. That figure it also accurate, but the measure, which comes out in the spring, looks at median annual earnings for full-time year-round workers; it includes self-employed workers, which the weekly numbers exclude, and excludes seasonal workers. The figures are based on the same raw BLS data.

Most notably, in the BLS numbers released the day after Thanksgiving, the earnings of women between the ages of 25 and 34 have shot up fairly substantially over the past 32 years, from 69 percent of men’s earnings in 1980 to 92 percent in 2011.

The gap still widens, though, as women age – a sign that while many young women enter the workforce on a more equal playing field with their male counterparts, they still tend to fall behind on income as they age.

A recent study from Catalyst, a nonprofit organization that promotes women in the business world, found that women in the business world are offered fewer of the “hot jobs” – those jobs with high visibility, central to an organization’s mission, that tend to lead to promotions down the road.

The Catalyst survey of top MBA grads found that men led projects with budgets more than twice the size of women’s, with teams that were more than three times as large, and that posed a higher risk to the company. Men also had roles with significantly more critical responsibility – one reason, Catalyst suggests in its analysis, for the persistent gender gap at senior levels that exists in the business world.

The United States is one of the only countries in the world without any guaranteed paid maternity leave.

Without the subsidized childcare costs that many nations have, many mothers have to factor child-care costs in their decision whether to return to work, and often take a leave of absence – which they’re later often penalized for when they do return to work. And in a labor market where about half of US workers get no paid sick time at all, women are still most often the ones to skip work – and forgo pay – to stay home with sick children or other family members.

Young women, college and the wage gap

Don’t assume your first pay offer will be the same as what a similar male graduate will get. Fifty years after the Equal Pay Act was passed, studies continue to find a pay gap between men and women. Some of the difference – women earn about four-fifths of men’s pay – can be attributed to women choosing lower-paying fields, or women temporarily leaving the workforce to raise children, or women taking more part-time jobs.

But a comprehensive report by the American Association of University Women, released last week, zeroed in on a workforce segment that, theoretically, should be on par: women and men getting their first jobs after college graduation.

The finding: Nearly the same gender gap as for the workforce at large. Young women, on average, are earning 82 percent of what their male peers are earning one year after college graduation.

Again, the choice of major and profession makes a difference. Men are more likely to be in the higher paying engineering and science fields.

But even in comparable business and management positions, women are earning less. Among business majors, for example, the survey found women earning about $38,000, on average, compared to men’s average of $45,000.

So here are the career recommendations for women who are concerned about the gap:

Don’t count on equal pay laws. Be prepared to tackle the pay issue head-on. Women’s advocacy groups say most women aren’t as aggressive about negotiating pay as men.

Don’t blindly accept the first number a prospective employer offers. Know a reasonable, competitive pay amount – that you’ve researched through your campus career office or online pay sources such as salary.com – and don’t be afraid to negotiate before you accept the job.

Studies repeatedly show that if you start out behind your male peer it can make a lifetime pay difference of tens of thousands of dollars. And that can hurt your ability to repay student loans and, eventually, your retirement pay amount.