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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.”

A 20% premium wage just for being male

The Equal Pay Act has been law for 50 years, but women are still way behind men in earnings.

April 9 is the date when U.S. working women finally catch up to the amount men earned by last December 31. That’s because the gender pay gap between women and men for full time year round workers is 20 cents on the dollar, and it’s not closing. In fact, it’s getting wider. According to the Institute for Women’s Policy Research in Washington, at current rates it will take another 45 years for women to catch up.

There are a number of causes for the pay gap, including job segregation ( “men’s jobs” – like plumbing, pay more than “women’s jobs” – like teaching). And more women take time out to care for kids and aging parents. But as many women know, plain old sex discrimination plays a big part. Lilly Ledbetter found out the hard way after 19 years at Goodyear, when she learned she had been underpaid all along compared to men doing the same job. Her case went all the way to the Supreme Court – where she lost. The conservatives on the Supreme Court said she should have complained earlier, even though she didn’t know about the discrimination earlier.

Congress fixed that catch-22 with Lilly Ledbetter Fair Pay Act, the first law President Obama signed. But that very small step for womankind was not nearly enough. The main reason Ledbetter got shafted was that she didn’t know her situation compared to the men. Employers still have no obligation to report pay statistics, and in most companies you can even get fired for talking pay with co-workers.

There’s a new bill – The Paycheck Fairness Act – to stop these arbitrary firings – if Congress ever passes it. Another tiny step, but it does nothing to help women learn how they’re being paid compared to men in the first place.

President Obama could fix a big part of the problem even without Congress. He could issue an Executive Order not only banning the practice of firing people for talking about pay, but also requiring employers to release pay statistics by gender. Not all employers, of course – just those that want federal contracts, paid for with your tax dollars. In this day of bailouts and boondoggles at taxpayer expense, citizens footing the bills have a right to know that any company getting government business pays its workers fairly.

Contact Pittsburgh employment lawyer Charles A. Lamberton at 412-258-2250 or visit the our Pittsburgh employment law firm website at lambertonlaw.com for more information.

Raise the Minimum Wage

A few remarks from a Nobel-prize winning economist on raising the minimum wage –

[The President has called for] a rise in the minimum wage from $7.25 an hour to $9, with subsequent increases in line with inflation. The question we need to ask is: Would this be good policy? And the answer, perhaps surprisingly, is a clear yes.

Why “surprisingly”? Well, Economics 101 tells us to be very cautious about attempts to legislate market outcomes. Every textbook — mine included — lays out the unintended consequences that flow from policies like rent controls or agricultural price supports. And even most liberal economists would, I suspect, agree that setting a minimum wage of, say, $20 an hour would create a lot of problems.

But that’s not what’s on the table. And there are strong reasons to believe that the kind of minimum wage increase the president is proposing would have overwhelmingly positive effects.

First of all, the current level of the minimum wage is very low by any reasonable standard. For about four decades, increases in the minimum wage have consistently fallen behind inflation, so that in real terms the minimum wage is substantially lower than it was in the 1960s. Meanwhile, worker productivity has doubled. Isn’t it time for a raise?

Now, you might argue that even if the current minimum wage seems low, raising it would cost jobs. But there’s evidence on that question — lots and lots of evidence, because the minimum wage is one of the most studied issues in all of economics. U.S. experience, it turns out, offers many “natural experiments” here, in which one state raises its minimum wage while others do not. And while there are dissenters, as there always are, the great preponderance of the evidence from these natural experiments points to little if any negative effect of minimum wage increases on employment.

Why is this true? That’s a subject of continuing research, but one theme in all the explanations is that workers aren’t bushels of wheat or even Manhattan apartments; they’re human beings, and the human relationships involved in hiring and firing are inevitably more complex than markets for mere commodities. And one byproduct of this human complexity seems to be that modest increases in wages for the least-paid don’t necessarily reduce the number of jobs.

What this means, in turn, is that the main effect of a rise in minimum wages is a rise in the incomes of hard-working but low-paid Americans — which is, of course, what we’re trying to accomplish.

Finally, it’s important to understand how the minimum wage interacts with other policies aimed at helping lower-paid workers, in particular the earned-income tax credit, which helps low-income families who help themselves. The tax credit — which has traditionally had bipartisan support, although that may be ending — is also good policy. But it has a well-known defect: Some of its benefits end up flowing not to workers but to employers, in the form of lower wages. And guess what? An increase in the minimum wage helps correct this defect. It turns out that the tax credit and the minimum wage aren’t competing policies, they’re complementary policies that work best in tandem.

So Mr. Obama’s wage proposal is good economics. It’s also good politics: a wage increase is supported by an overwhelming majority of voters, including a strong majority of self-identified Republican women (but not men). Yet G.O.P. leaders in Congress are opposed to any rise. Why? They say that they’re concerned about the people who might lose their jobs, never mind the evidence that this won’t actually happen. But this isn’t credible.

For today’s Republican leaders clearly feel disdain for low-wage workers. Bear in mind that such workers, even if they work full time, by and large don’t pay income taxes (although they pay plenty in payroll and sales taxes), while they may receive benefits like Medicaid and food stamps. And you know what this makes them, in the eyes of the G.O.P.: “takers,” members of the contemptible 47 percent who, as Mitt Romney said to nods of approval, won’t take responsibility for their own lives.

Eric Cantor, the House majority leader, offered a perfect illustration of this disdain last Labor Day: He chose to commemorate a holiday dedicated to workers by sending out a message that said nothing at all about workers, but praised the efforts of business owners instead.  The good news is that not many Americans share that disdain. We should raise the minimum wage, now.

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.

Republican filibuster kills Paycheck Fairness Act

Today, a minority of United States Senators, all of them Republican, killed legislation meant to fight gender discrimination in the workplace.  The Paycheck Fairness Act, supported by 9 out of every 10 Americans, and by the overwhelming majority of Republican voters, would have held corporations responsible for paying women less than men for the same work, allowed more time for women to file claims for pay discrimination, and stopped corporations from retaliating against their employees.  Every single Senate Republican voted against the bill.  Even though more than half the Senate supported the legislation, archane Senate rules permitted the Republican minority to block it from passage.

Paycheck fairness and equal treatment for women in the workplace strike us as self-evidently good things, and why the overwhelmingly white male Senate Republican caucus would vote against them is mystifying.  In our view, votes like this one show how profoundly out of touch the Republican Party Leadership has become. Out of touch with the rights of women, out of touch with public sentiment, and out of touch with their own constituents.  Perhaps the flood of corporate money into national politics is to blame.  None of us can know for certain.  But there is at least one thing of which all women who support equal pay for equal work can be perfectly clear, the Senate Republicans just spit in your direction.

From our offices here in Pittsburgh, however, we send special kudos to  Pennsylvania Senator Bob Casey. Senator Casey joined every other Democrat and Independent in the Senate and cast a vote for women and pay equality.

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.

CONTACT US

LAMBERTON LAW FIRM, LLC
707 GRANT STREET
1705 GULF TOWER
PITTSBURGH, PA 15219

412-258-2250 | OFFICE DIRECT
412-498-4120 | CELL
412-258-2249 | FAX

CAL@LAMBERTONLAW.COM


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