Bank of America Sued over Gender Bias in Retention Bonus System

June 29, 2009 by Suzanne Conlon

Bank of America Corp has inherited trouble following its purchase of Merrill Lynch & Co on January 1, 2009.   A federal lawsuit filed in Manhattan alleges discrimination against female brokers by offering them lower retention bonuses than male counterparts.

The lawsuit seeks class-action status, arguing that female brokers were usually eligible for lower bonuses and that Merrill Lynch gave wealthier clients to male brokers.   Because bonuses were based on fees earned on client assets, the system "disproportionately disadvantages women and advantages white men as favored employees," the complaint said.

Retention bonuses, which can reach seven figures, are often awarded to brokers who work at companies being acquired to keep them from leaving. "The idea of a retention bonus is to retain the best and the brightest," said Linda Friedman, a lawyer who is representing the plaintiff. "Bank of America acquired a company that had a history of mistreatment. Rather than acknowledge that, and be part of the solution to level the playing field, Bank of America picked up where Merrill Lynch left off."

Bank of America spokeswoman, Shirley Norton, said “The adviser transition program was merit-based and implemented fairly and equally for men and women. We do not tolerate discrimination."

The case was brought by Jaime Goodman, a 16-year veteran of Merrill Lynch.  She was a top-quintile performer and "a $1 million producer for nearly a decade."  But she argues that she would have fared better and received a higher retention bonus in the wake of the Bank of America deal were it not for discriminatory practices.

Goodman is seeking compensatory damages including the value of all compensation and benefits lost because of the alleged bias, as well as punitive damages and other remedies.  Last year, Citigroup Inc agreed to pay $33 million to settle similar charges in a federal lawsuit in San Francisco brought by about 2,500 female brokers at its Smith Barney unit.

Bank of America and Merrill had previously faced other bias lawsuits accusing them of steering business to white workers, including a 2005 federal lawsuit against Merrill on behalf of African-American brokers which is still in the courts.  Bank of America has about 15,800 brokers, most of whom came from Merrill.