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KPMG Agrees to $10 Million Settlement in Pay Discrimination Suit

Posted on Apr. 5, 2021

KPMG LLP has agreed to pay $10 million to resolve long-running litigation over claims of gender and pregnancy discrimination in pay and promotion, though the firm continues to deny wrongdoing.

If approved, the settlement would resolve the claims of over 450 individuals, with an average claimant recovery amount of roughly $16,556, according to a memorandum filed with the U.S. District Court for the Southern District of New York March 30 by the plaintiffs in Kassman v. KPMG LLP. The settlement includes $3.5 million for attorney fees and costs and would resolve litigation that has spanned roughly a decade.

The lawsuit began as a class action complaint filed against KPMG in 2011 by Donna Kassman, who joined the firm as a tax associate in 1993. The complaint alleged that the firm discriminates based on gender and perpetuates the pay gap in the accounting industry.

While the court declined to certify a class of roughly 10,000 women in KPMG’s tax and advisory functions in November 2018, it permitted former opt-in plaintiffs to pursue claims under the Equal Pay Act of 1963 by serving fact sheets on KPMG, which roughly 450 plaintiffs did. Some fact sheets were later dismissed, but Equal Pay Act claims of 437 former opt-in plaintiffs are still pending, along with the claims of nine named plaintiffs and seven more former opt-in plaintiffs who have appealed the court’s dismissal of their fact sheets to the Second Circuit.

The parties announced on December 21, 2020, that they had reached a settlement in principle, but they continued to negotiate the terms of a final agreement during the early months of 2021. A proposed order and settlement agreements for both the named plaintiffs and the former opt-in plaintiffs were filed March 30, along with the plaintiffs’ memo urging the court to approve the settlement and KPMG’s response.

KPMG said in its brief that it supports the plaintiffs’ motion for settlement approval, but added that it “continues to dispute the allegations by the claimants in this case and denies any and all purported legal violations or wrongdoing.” The firm added that it is confident that it “would prevail on summary judgment or at trial.”

Based on KPMG payroll data, the plaintiffs’ damages are estimated to be almost $50 million, according to the plaintiffs’ memo. Most of that is for Equal Pay Act claims, but the named plaintiffs also have promotion and constructive discharge claims, it says. “The total damages for the nine named plaintiffs are approximately $3 million,” it adds.

Those numbers ignore litigation risks, and the $10 million settlement amount is roughly 20 percent of the claimants’ potential damages, putting it “well within the range of settlements routinely approved by courts,” the plaintiffs said. The $3.5 million earmarked for plaintiffs’ counsel represents 12 percent of the fees and costs that counsel incurred, they added.

The settlement amount, less attorney fees, will be allocated to claimants by a neutral third party based on factors including alleged Equal Pay Act damages, whether the court dismissed the claimant’s fact sheet or similar ones, and the extent of the claimant’s participation in the litigation, according to the plaintiffs’ memo. “No claimant will receive less than $250,” less tax withholdings and deductions, it says.

The plaintiffs in Kassman et al. v. KPMG LLP, No. 1:11-cv-03743, are represented by attorneys with Sanford Heisler Sharp LLP and Lieff Cabraser Heimann & Bernstein LLP. KPMG is represented by attorneys with Sidley Austin LLP and Ogletree, Deakins, Nash, Smoak & Stewart PC.

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