The Consumer Financial Protection Bureau has agreed to pay $6 million to settle a discrimination lawsuit brought by current and former Black and Hispanic employees.
The settlement agreement covers 85 minority employees who alleged they were paid lower wages than their white counterparts and faced retaliation. The proposed settlement still must be approved by Judge Beryl A. Howell of the U.S. District Court for the District of Columbia.
The lead plaintiffs in the case, Carzanna Jones and Heynard Paz-Chow, helped establish the National Treasury Employees Union at the CFPB and served, respectively, as union steward and chief steward. They both filed internal complaints in 2014 with the CFPB's Office of Civil Rights and engaged in negotiations to reform the bureau's compensation system. In 2018, they filed a lawsuit alleging that Blacks and Hispanics employed as consumer response specialists were subjected to discriminatory and retaliatory policies and practices.
The CFPB has denied the allegations and did not admit any wrongdoing by entering into the proposed settlement, which was filed on Aug. 31.
"This settlement of a 2018 lawsuit resolves claims from the early years of the CFPB's history," the bureau said in a statement. "The CFPB remains committed to ensuring all employees are treated fairly."
Pay differences emerged as a flash point early in the CFPB's inception in 2011, when the agency hired employees from other banking and securities regulators as well as the private sector.
Allegations of discrimination at the CFPB first surfaced in 2013 when the bureau was still in its infancy. At the time, under former CFPB Director Richard Cordray, employees
In 2014, American Banker
The reports on pay inequities led to a Congressional investigation with several CFPB employees claiming retaliation by management. The CFPB
At the time, Cordray acknowledged the pay disparities in an email to employees, saying there "was no single factor that caused this result."
Last year, CFPB Director Rohit Chopra negotiated a separate agreement with the union that overhauled the agency's compensation system. While the changes were not a condition of the settlement, the bureau's new negotiated compensation agreement addresses pay issues that the plaintiffs raised in the lawsuit.
"The Settlement is fair, reasonable, and adequate," Linda D. Friedman, founding and managing partner at Stowell & Friedman, a Chicago law firm representing the plaintiffs, wrote in court documents. "Plaintiffs' counsel and Named Plaintiffs recognize that the Pay Agreement substantially addresses the issues that they would have sought to address through Programmatic Relief in this matter."
The settlement was reached after expansive discovery, including the exchange of over 100,000 documents, witness depositions, and expert analysis of CFPB compensation data, according to court documents.
A special master has been appointed to monitor and assist with the settlement that covers employees who worked in the agency's consumer response office between February 2011 and April 2022.
