Accounting Today, October 6, 2014 – KPMG Female Employees Receive Notices About Gender Discrimination Suit

On Behalf of | Oct 6, 2014 | News

NEW YORK (October 6, 2014) – Approximately 9,000 current and former female employees of KPMG are receiving notices this week about the opportunity to join a class-action lawsuit against the firm involving the Equal Pay Act, claiming they were paid less than their male counterparts.

A U.S. District Court has granted a law firm that initiated the lawsuit in 2011 the right to mail the notices to women who have worked at the firm since 2008. The court-ordered notice was mailed last Friday, Oct. 3, and should be reaching the women’s mailboxes this week.  After receiving the one-page notice, the 9,000 current and former KPMG employees will have the opportunity to submit a Consent to Join form between now and Jan. 31, 2015 in order to join together in this suit that seeks to recover the compensation that the plaintiffs contend they should have been paid.

Women will be able to either email, fax or mail the forms back to the claims administration company, according to Katherine Kimpel, a managing partner at the law firm Sanford Heisler in Washington, DC, who is lead counsel in the case.

The notice was mailed after the plaintiffs in the case, known as Kassman, et al. v. KPMG, Civ. 1:11−cv−03743 (S.D.N.Y.), won a long battle to get the notice approved by a court (see Judge Rejects KPMG Move to Dismiss Gender Discrimination Suit). U.S. District Judge Lorna G. Schofield granted conditional collective action certification after reviewing voluminous briefings from the two sides.

In issuing the ruling in favor of Plaintiffs, Judge Schofield noted, “Plaintiffs’ preliminary expert analysis shows that nationwide pay disparities at KPMG attributable to gender are statistically significant at more than eleven standard deviations, meaning that the probability that KPMG’s compensation could be gender neutral is less than one in one hundred million.”

The judge ultimately concluded that plaintiffs submitted evidence at this early stage sufficient to suggest that female professionals at KPMG were paid less than their male counterparts for the same work and that the female employees at KPMG might be, together with the class representatives in the case, “victims of a common policy or plan that violated the law.”

“On the whole the accounting industry does struggle with things that do appear to be gender discrimination,” said Kimpel. “You see a very heavy representation of women at the entry level positions, like the associate positions, but the representation of women drops off quite dramatically the higher and higher that you work through the ranks. That’s true in accounting generally, but it’s particularly true at the Big Four accounting firms. I wouldn’t be surprised if there were similar problems and similar kinds of evidence at other companies, but we’ve really focused on KPMG in this litigation so far.”

KPMG disputes the allegations. “We will not comment on pending litigation other than to note that plaintiffs’ allegations are without merit, and KPMG will vigorously defend itself,” said KPMG spokesman Manuel Goncalves in an email. “As we have noted previously, KPMG is recognized as a leader for its strong commitment to supporting women in the workplace. Diversity and inclusion have long been priorities for the firm, and as such are woven into our culture and everything we do. We continue to believe this lawsuit has no basis in fact.”

A former senior manager, Donna Kassman, filed suit against the firm in 2011, claiming she was repeatedly denied promotion after returning from maternity leave (see KPMG Sued for Gender Discrimination). Four other female employees—Linda O’Donnell, Sparkle Patterson, Jeanette Potter and Ashwini Vasudeva—later joined the $400 million class-action lawsuit. Women comprise approximately half of KPMG’s employees, according to the plaintiffs, but only 18 percent are partners.

“The actual pay disparities have yet to be determined for each woman,” said Kimpel. “In our paper that we’ve submitted to the court, some women were reporting disparities in the $5,000 to $7,000 range in a given year, whereas other women like Donna Kassman, who is our lead plaintiff, we believe that she was underpaid by as much as $50,000 a year. It will depend on who the individuals are and who the right comparators are, but the results are going to be situation specific.”

KPMG is the only firm being sued by Kimpel’s firm, Sanford Heisler. However, KPMG, Deloitte and PricewaterhouseCoopers have also faced separate lawsuits from another law firm, Outten & Golden in New York, accusing them of violating federal and state labor laws by not paying their entry-level audit associates overtime (see Audit Firms Slapped with Overtime Lawsuits). Sanford Heisler’s suit focuses on gender discrimination.

Kimpel anticipates there will be further litigation. “KPMG has vigorously opposed this litigation every step of the way,” she said. “They filed a motion to dismiss and tried to say that our case should not be allowed to proceed into discovery on a class-wide basis. In February of 2013, the judge on the case, Judge [Jesse] Furman, issued a sweeping rebuke of that position and allowed the case to move into class discovery. Then again when we sought to have the court send this notice to what turned out to be about 9,000 women who fit into the definition of the class, KPMG again really opposed that. Again the court sided with the plaintiffs and said no, that these 9,000 women should be told about the litigation and should be given an opportunity to seek to join if they choose.”

The notice is being mailed to former and current female employees who worked in a client service delivery role as an associate, manager, senior manager, director or managing director role in KPMG’s Advisory or Tax functions from Oct. 17, 2008 to the present. The case is not limited to any particular role, division or geography because, as the court noted, KPMG’s “compensation policies are set at high levels and applied across job titles, function groups and geographic locations.”

KPMG has mounted a strong effort to fend off the lawsuit. “KPMG has fought this battle hard,” said Kimpel. “We’re certainly anticipating that they may keep fighting it hard, but we’re ready for it, and we believe very strongly in this case. It is not often that we see evidence like what we have seen in this case thus far, and we believe that a lot of women around this country have been cheated out of compensation that they have rightly earned, and that they should have the opportunity to get that money back.”

This article originally appeared in Accounting Today.