December 10, 2018

Female KPMG Employees Seek Class Status in Gender Discrimination Lawsuit, Detail Alleged Sexual Misconduct at the Firm

There was a new development yesterday in the long-running gender bias lawsuit against KPMG, in which a group of current and former female advisory and tax professionals have accused the firm of gender, pay, and promotion discrimination, as well as condoning sexual harassment.

Attorneys representing the plaintiffs filed a motion on Nov. 27 that asked a New York federal court to certify their class and collective action under Title VII of the Civil Rights Act of 1964 and the Equal Pay Act.

“Today’s filings demonstrate pervasive gender discrimination against women at KPMG, where women are underpaid and underpromoted,” Kate Mueting, a partner and co-chair of the Title VII practice in Sanford Heisler Sharp’s Washington, DC, office and lead attorney for KPMG’s female plaintiffs, said in a statement.

KPMG also filed a motion in opposition of the plaintiffs’ request for class and collective action certification.

Back in 2011, Donna Kassman, a former KPMG senior manager, filed a $350 million lawsuit against the firm alleging “relentless gender discrimination and harassment.” In addition, she claimed that despite speaking up, the firm had “no interest in remedying the situation.”

Since then, five other womenTina Butler, Cheryl Charity, Heather Inman, Nancy Jones, and Carol Murray—were added to the class-action lawsuit as named plaintiffs.

The plaintiffs allege that KPMG’s pay and promotion practices violate the disparate impact provisions of Title VII and the New York Human Rights Law, New York City Human Rights Law, and the New York Equal Pay Law. The female KPMG workers also claim that “KPMG engages in a pattern or practice of intentional discrimination against women (disparate treatment) in violation of Title VII and New York law,” the motion states.

[The plaintiffs] seek to certify a class of female Associates, Senior Associates, Managers, Senior Managers/Directors, and Managing Directors employed within KPMG’s Tax and Advisory functions between October 30, 2009 through the date of judgment. In addition, Plaintiff Kassman seeks to certify a class of the same group of employees employed by KPMG in the state of New York from June 2, 2008 through the date of judgment.

The motion seeks certification of the plaintiffs’ Title VII claims. The proposed Title VII class is projected to include more than 10,000 women, according to the motion.

The other piece to the motion is the final certification of the Equal Pay Act collective. In October 2014, 9,000 women—both past and present Klynveldians—were sent a court-ordered notice that welcomed them to join the collective action challenging pay discrimination at KPMG. Of those 9,000, 1,112 responded to the notice, allowing them to join the Equal Pay Act collective.

The motion states:

[A] small cadre of senior leaders at KPMG ultimately control all pay decisions. According to its written policies, KPMG purports to base compensation on performance, as well as on an employee’s job level, work experience in the field, time in job, education, and geography. As Plaintiffs will demonstrate, there is another, unstated factor: gender.

In a statement, KPMG spokesperson Manuel Goncalves said the plantiffs’ accusations are “without merit.”

“We will not comment on pending litigation other than to note that plaintiffs’ claims are without merit, and KPMG will continue to vigorously defend itself. As we have noted previously, KPMG is committed to the advancement of women throughout the organization, and is recognized as a leader for its strong record of supporting women in the workplace. Diversity and inclusion have long been priorities for the firm, and are woven into our culture and everything we do. We continue to believe that the allegations are not at all representative of the overwhelmingly vast majority of women’s experiences at KPMG. Instead, plaintiffs’ counsel refer to the complaints lodged while ignoring the robust investigations of those complaints and sanctions addressing any misbehavior.”

But the plaintiffs paint a different picture of how women are slower to move up the ranks at KPMG than men. They allege that, although women are hired as associates at nearly the same rate as men, females represent only about one-fourth of the managing directors and less than one-fifth of the partners at KPMG. Based on 2016 KPMG data, the motion included the percentage of women who held six positions within the firm:

  • Partners: 19.4%
  • Managing directors: 27.43%
  • Senior managers/directors: 35.79%
  • Managers: 37.53%
  • Senior associates: 44.51%
  • Associates: 45.12%

According to the plaintiffs, a committee of KPMG’s Woman’s Advisory Board acknowledged the flaws in the firm’s promotion process, noting that women face “unclear promotion paths” and “career paths for managers is unclear.”

Kathy Hannon, the National Managing Partner of Diversity and Corporate Responsibility, acknowledged in 2011 that “[w]omen at KPMG are beginning to say that KPMG is not serious about diversity” and that “what we don’t have are sponsors – advocates for women when an opportunity arises and their name is put up for consideration.” She has also acknowledged that “even though nearly half our professionals are women, only 11.6% hold leadership roles” and that “female senior managers feel stagnated.” Despite admitting in 2011 that the firm had received a “wake-up call” to improve gender representation “in every practice and office, in the partnership and in leadership roles,” KPMG has elected not to wake up.

The plaintiffs also claim that women’s total compensation is 2.7% less than men’s in KPMG’s tax practice on average and 2.8% less in the firm’s advisory practice.

The motion states that KPMG acknowledged as early as 2009 that “compensation disparities still exist for women.”

A presentation by the firm-wide Women’s Inclusion Initiative in 2011 noted that “KPMG’s current record of retaining, promoting, and providing meaningful representation of females in leadership is insufficient to meet our clients’ and our own expectations,” and “our failure to provide succession planning that includes female partners is expected to create a long term competitive disadvantage.” The same presentation acknowledged that female employees often express frustration with pay equity.

The motion also details alleged sexual harassment by men at KPMG toward women employees.

The evidence … includes testimony from Named and Opt-In Plaintiffs; internal complaints by female employees of gender discrimination, sexual harassment, retaliation, and hostile work environment submitted to KPMG’s centralized Human Resources and Ethics & Compliance departments during the discovery period; concerns articulated by women in annual employee surveys and exit interviews; and other firm emails and records reflecting persistent biases and systemic problems for women.

This constellation of evidence shows that KPMG tolerates, condones, and facilitates a hostile “boys’ club” culture that is rife with gender bias and sexual harassment, that KPMG fails to respond appropriately to complaints by female employees, and that complaining does not lead to remedies, but rather to retaliation.

Some of the examples contained in the motion are pretty icky and are pretty similar to other sexual harassment allegations from former female employees at other Big 4 firms (not once but twice at EY and at Deloitte).

  • One female employee testified that her male supervisor “suggested she wear a particular skirt to work and that he could ‘put his dick between my tits and rub.’”
  • A female senior tax manager alleged that a male tax partner sexually harassed her on four occasions, “asking her to come to his hotel room to review work but then touching her below the waist and inviting her to sit on his lap.”
  • Another woman employee testified that KPMG partners “did body shots off female employees.”
  • A female advisory associate reported that a male advisory director who sat next to her at work “stroked her hand, stared at her chest, and called her ‘baby.’”
  • A male tax senior associate sexually harassed a female tax associate “by grabbing her buttocks and kissing her at a firm-sponsored party.”

And it gets worse:

Even more disturbingly, Class members have reported criminal sexual assault, including rape and attempted rape by male KPMG co-workers at work events. … (during a Tax Skills Seminar a male Tax Senior Associate made unwanted sexual advances towards two female Tax Associates; and grabbed one of the female Tax Associates by the neck, pushed her into the corner, tried to kiss her, and refused to leave her hotel room until she screamed). …

(after a KPMG training seminar, a male Associate groped two female Associates’ breasts beneath their blouses while sitting in between them in a car; another male associate told the police that the way the victims were dressed made it easy for accidents to happen). …

(a female Advisory Associate was raped by a male Associate who had previously barged in on her using the restroom and said, “when are we going to fu*k?”). This widespread evidence that women are routinely mistreated, and even assaulted, at work events provides further proof that women are working within a culture of permissive harassment and intentional discrimination.

The plaintiffs contend that KPMG often allows sexual harassment to go unpunished, enabling the behavior to continue, often by the same individuals.

Common evidence produced from KPMG’s centralized complaint database establishes that there have been numerous complaints of sexual harassment, often characterized as simply a “lack of professionalism” rather than harassment and at least three reported complaints of criminal sexual assault and rape against women in Class positions.

KPMG acknowledges that it does not apply standardized sanctions in response to substantiated complaints. Instead, KPMG routinely takes action that is woefully inadequate. The widespread pattern at KPMG is to protect the men who engage in these behaviors and merely give them a slap on the wrist (if that). As a result, the sexual harassment remains wholly unaddressed and continues. For instance, even though a male KPMG Advisory Manager had previously been reprimanded for “similar issues,” KPMG merely issued a written warning instructing him to take a one-hour online course after his repeated misconduct, including determining that on multiple occasions at work the Manager shared with his coworkers photos of young women he was “checking out,” explicit personal emails, and videos of scantily clothed women dancing.

“Despite the many gains women have made in the workplace, the record in this case shows that the deck continues to be stacked against them,” said Kelly Dermody, chair of the Employment Practice Group at Lieff Cabraser Heimann & Bernstein LLP, and co-lead counsel for the plaintiffs. “Change will only be possible through the collective resistance of the brave women who have come forward.”

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