State Street Agrees to $4.2 Million Pay Equity Fund

The Department of Labor announced the signing of a conciliation agreement with State Street Corp. in which the financial services firm will allocate $4.2 million for future pay adjustments to resolve alleged compensation discrimination.

The department’s Office of Federal Contract Compliance Programs said compliance evaluations in 2017 and 2018 at four Boston-area State Street establishments initially raised concerns about base pay and bonuses for female managing directors. OFCCP determined that the employer’s actions violated Executive Order 11246, which prohibits federal contractors from discriminating in employment based on race, color, religion, sex, sexual orientation, gender identity or national origin.

State Street, which is a federal contractor, has not admitted to any wrongdoing. However, to resolve the situation, it proactively made $483,000 in pay equity adjustments for the female managing directors identified in the government’s audit and it has agreed to designate $4.2 million for future pay equity adjustments to make sure its compensation practices and policies are free of discrimination.

As part of the agreement, State Street will also conduct a pay equity analysis for all State Street establishments nationwide, evaluating base pay and total compensation for all employees.

“Federal contractors like State Street Corp. must make certain its employment practices comply with all federal law, including those that seek to eliminate gender-based barriers to equal employment,” said Michele Hodge, OFCCP acting director.

State Street is a global financial services and bank holding company with contracts to provide financial services to the Pension Benefit Guaranty Corp. Since 2020, State Street has held more than $69 million in federal contracts.

First signed by President Lyndon Johnson in 1965 and amended several times since then, Executive Order 11246 protects the rights of workers employed by federal contractors to remain free from discrimination on the basis of their race, color, religion, sex, sexual orientation, gender identity, or national origin.