Record Payout for Racial Discrimination by Merrill Lynch

In Employment Law by Coolidge Wall

A recent case demonstrates how dangerous it is when an employer does not monitor the workplace to ensure equal opportunity. In what could be a record payment to settle an American class action suit for racial discrimination, Merrill Lynch agreed in August to pay $160 million to black brokers and trainees who worked at the firm since 2001.

The lead plaintiff in the case, 68-year-old George McReynolds, has worked at the firm since 1983 and remained at the firm during the pendency of the suit. An estimated 1,200 people may have a claim in the settlement.

Allegations made during the case include:

  • Black employees suffered discrimination on wages, promotions and handling of accounts.
  • Merrill Lynch provides rewards for team productivity on accounts. Black brokers were not provided the same team opportunities or resulting rewards.
  • The first black chief executive of Merrill Lynch, E. Stanley O’Neil, testified in his deposition that black brokers may have faced difficulties because firm clients were mainly white and less likely to trust a black broker.
  • In 2005, when the lawsuit was initiated, only 700 of 14,000 financial advisors for Merrill Lynch were black.

The settlement came months short of the January 2014 trial date.

While few clients will face the same degree of exposure, it is important to monitor the workplace to make sure that employees of different ethnic and racial backgrounds are being treated equally in terms of opportunity and advancement. If disparities exist which can’t be explained, you need to be proactive to resolve the problem before a plaintiff or the EEOC comes calling.