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State Street Corp to pay $5M to settle alleged pay bias against female, black executives

By Cynthia L. Hackerott, J.D.

Financial services company State Street Corporation has agreed to pay $5 million to settle OFCCP claims that the employer discriminated against 305 female and 15 black executive employees in its compensation practices. State Street, the parent company of State Street Global Advisors, the investment firm behind Wall Street’s iconic Fearless Girl statue, denied those claims but agreed to resolve them through a conciliation agreement. The agreement represents the largest financial settlement negotiated by the OFCCP since the agency’s $5.5 million compensation discrimination settlement in 2004 with Wachovia Corporation (involving 2,021 current and former female employees).

This settlement resolves claims made by the OFCCP following a compliance evaluation of State Street’s headquarters establishment in Boston, Massachusetts, that began on December 28, 2012. The agency issued a notice of violations in this matter on March 31, 2017. The agreement was signed on September 29 but not posted to the OFCCP FOIA Reading Room webpage until this week.

Pay disparities. As the result of a regression analysis conducted from information obtained in the compliance review, the OFCCP determined that since December 1, 2010, State Street has paid women in senior vice president (SVP), vice president (VP), and managing director (MD) positions less in base salaries, bonus pay, and total compensation annually than similarly situated men in those positions. In addition, the OFCCP determined via a regression analysis that since December 1, 2010, State Street paid black employees working in VP positions less annually than similarly situated white employees working as VPs. According to the OFCCP, a statistically significant disparity in compensation remained in both regression analyses even when legitimate factors affecting pay were taken into consideration.

For purposes of the agreement only, the OFCCP identified the affected class members as 305 female SVPs, VPs, and MDs and 15 black VPs. Eligible class members will share in a settlement fund consisting of $4,492,174.39 in back pay and $507,825.61 in interest.

Additional analyses. State Street has also agreed to, within 180 days from the date of the agreement, conduct a compensation analysis of SVPs, VPs, and MDs at the headquarters facility. At a minimum, this analysis will utilize: prior year’s performance rating, experience/tenure using time in job, other time in company (defined as total time in company minus time in job), pay band/grade, job group, full time status (where applicable) and business unit. It will also control for employees who were not bonus eligible. The company has further agreed to provide the OFCCP with sufficient information for the agency to replicate the employer’s analysis and for the OFCCP to conduct its own analysis. In addition, State Street agreed to investigate and remedy, through salary adjustments, any statistically significant disparities based on gender, ethnicity, and/or race found by the company or the agency that cannot be explained by legitimate factors. The agreement also requires State Street to conduct a similar compensation analysis annually for the next three years.

Other terms of settlement. Furthermore, State Street has agreed to:

  • conduct an in-depth analysis of its total employment process to determine whether and where impediments to equal employment opportunity with respect to policies and practices that affect compensation exist;
  • implement “improved” policies;
  • train individuals involved in determining compensation on those policies; and
  • monitor base salary for employees in SVP, VP, and MD positions for any indication of statistically significant disparities on the bases of gender, ethnicity, and/or race and it will investigate and remedy any disparities not explained by legitimate factors.