Goldman Sachs settles gender bias lawsuit for $215 million
Goldman Sachs agreed to pay $215 million to settle a long-standing class-action lawsuit that alleges the finance giant systematically underpays and undervalues women.
The settlement, announced Monday, covers roughly 2,800 female associates and vice presidents employed in various divisions at Goldman, where men continue to outnumber women and predominate in senior roles. As part of the settlement, the firm will hire an "independent expert" to analyze its promotion and performance evaluation processes for the next three years, the company said in a statement. The agreement also requires Goldman to investigate and address gender pay gaps in its ranks and have an independent expert conduct additional pay equity studies.
"After more than a decade of vigorous litigation, both parties have agreed to resolve this matter," Jacqueline Arthur, Goldman Sachs global head of human capital management, said in a statement. "We will continue to focus on our people, our clients and our business."
The lawsuit was brought in 2010, when three former female Goldman employees alleged the storied firm violated federal and New York City laws by engaging in a systematic "pattern and practice" of discrimination against its female employees. The suit cited 2009 company figures which showed women workers represented 29% of Goldman's vice presidents and 17% of its managing directors, and figures from 2008 in which women represented only 14% of the firm's partners, according to the complaint. Goldman did not dispute the numbers.
In a similar lawsuit in 2007, a federal judge approved a $46 million settlement of a class-action suit against Morgan Stanley, brought by a group of six women alleging gender discrimination by the firm. The suit was later expanded to cover a class of around 3,000 women who worked at the company between August 2003 and June 2007.
Settlements are a go-to means of protecting Wall Street firms from bad publicity. Merrill Lynch in 2013 paid $160 million to Black financial advisers to settle a racial bias suit. In 2017, Wells Fargo & Co. settled a class action accusing the firm of racial discrimination for $35.5 million.
This settlement is much larger than previous settlements, however. It's nearly four times as large as the $54 million payout that ended a sex discrimination lawsuit against Wall Street brokerage Morgan Stanley back in 2004.
In the absence of a settlement, the case would have gone to trial next month, laying bare for the public a rare look into the gender dynamics that underpin high-profile Wall Street firms' operations.
Slow to evolve
Goldman and other finance titans have publicly signaled their commitment to making their ranks more diverse and inclusive, but the process is still slow going.
Women comprised just 29% of Goldman's 2022 partner class, the firm's most inclusive group of promotions to date.
Women are also less likely to be found in the C-suite. Although roughly 46% of employees in the finance sector are women, just 15% occupy executive roles, data from the World Economic Forum's 2017 Global Gender Gap Report shows.