KPMG Workers Urge Court To Certify Sex Bias Action

Posted November 27th, 2018.

As It Appeared On
Law360

By Braden Campbell

Law360 (November 27, 2018, 8:59 PM EST) — A group of female KPMG LLP tax and advisory workers accusing the firm of maintaining a set of policies and practices that work to depress women’s salaries and deny them promotions urged a New York federal court Tuesday to certify their long-running class and collective action.

By putting pay decisions in the hands of a small number of leaders, employing an “opaque” promotion system and ignoring years of complaints of gender-related inequities, KPMG fails to promote women at the same rates it does men and pays women less than their male equals when they do move up, the women argued in a motion to certify their class and collective action under Title VII of the Civil Rights Act and the Equal Pay Act.

KPMG also filed its motion opposing the workers’ class certification motion Tuesday. U.S. District Judge Lorna Schofield held a hearing on the motion in August, but only directed the parties to file the underlying documents earlier this month.

“KPMG purports to base compensation on performance, as well as on an employer’s job level, work experience in the field, time in job, education, and geography,” the women say. “As plaintiffs will demonstrate, there is another, unstated factor: gender.”

The women, who sued in 2011, make out disparate impact and disparate treatment discrimination theories under Title VII, which bars employers from discriminating against workers based on their sex. Disparate impact theories allege employers wield neutral policies with discriminatory effect, while disparate treatment theories are based on overt bias.

The women point to alleged stark differences in pay and promotion rates to back up their claims of disparate impact discrimination. They allege women occupy about half the positions on the bottom rung of KPMG’s workforce but make up less than a fifth of the firm’s partners, and that women in KPMG’s tax and advisory segments make nearly 3 percent less than men on average. These disparities are the result of promotion and pay-setting practices that shortchange women, the workers say.

For their disparate treatment theory, the women allege KPMG leadership knows about these gaps in pay and opportunity and has done nothing to address them, and has ignored women’s sexual assault and harassment complaints.

The memo also asks Judge Schofield to give the final go-ahead to an Equal Pay Act class based on the alleged pay disparities and KPMG’s alleged discriminatory application of its pay-setting policies. The court previously let the workers notify collective members of the suit, the first stage of the two-step certification process under the EPA.

“The evidence shows that KPMG pays women less than men, even though everyone is in jobs that require the same skills, effort and responsibility,” said Sanford Heisler Sharp LLP attorney Kate Mueting, who represents the workers. “With respect to the Rule 23 claims under Title VII, evidence shows KPMG discriminates against women both in pay and promotions.”

About 1,100 women have opted into the equal pay class, and KPMG has pegged the Title VII class at more than 10,000 members, Mueting said.

KMPG’s memo argues that the workers’ disparate impact theory suffers from a “fatal flaw” because it’s based on managers’ discretion to set pay and dole out promotions. The firm argues the U.S. Supreme Court greenlit such practices in 2011’s Wal-Mart Stores Inc. v. Dukes ruling, which said policies giving supervisors discretion over “employment matters” are “presumptively reasonable.”

KPMG also argues the workers lack “any coherent theory or proof” of bias, arguing their expert “found no statistically significant gender gaps in promotions for nearly half” of KPMG’s job levels. It also points out the worker’s case, which purports to challenge “systemic” bias against women, leaves out the half of the firm outside the tax and advisory groups. And it called the workers’ claims of rampant sex-based mistreatment “cherry-picked” and “sensationalized.”

KPMG spokesman Manuel Goncalves said the workers’ claims are “without merit, and KPMG will continue to vigorously defend itself.”

“We continue to believe that the allegations are not at all representative of the overwhelmingly vast majority of women’s experiences at KPMG,” Goncalves said in a statement. “Instead, plaintiffs’ counsel refer to the complaints lodged while ignoring the robust investigations of those complaints and sanctions addressing any misbehavior.”

The workers are represented by Kelly Dermody, Anne Shaver, Michael Levin-Gesundheit, Tiseme Zegeye and Rachel Geman of Lieff Cabraser Heimann & Bernstein LLP, and David Sanford, Kate Mueting, Thomas Henderson, Saba Bireda and Jeremy Heisler of Sanford Heisler Sharp LLP.

KPMG is represented by Colleen Kenney, Jonathan Lotsoff, Wendy Lazerson and John Levi of Sidley Austin LLP, Peter Hughes, Diane Saunders and Chris Pace of Ogletree Deakins Nash Smoak & Stewart PC and Steven Moore and Stacy Mueller of Constangy Brooks Smith & Prophete LLP.

The case is Kassman et al v. KPMG LLP, case number 1:11-cv-03743, before the U.S. District Court for the Southern District of New York.

–Editng by Jay Jackson Jr.

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