State Street to allocate $4.2 million to adjust wages after alleged gender discrimination

State Street Corporation has agreed to allocate $4.2 million for future pay adjustments to resolve allegations of gender discrimination at four of its Boston-area offices, the U.S. Department of Labor announced Monday.

The department's Office of Federal Contract Compliance Programs (OFCCP) initially raised concerns about the base pay and bonuses for female managing directors during routine evaluations, dating back to 2017 and 2018.

The office found that the Massachusetts-based global financial services firm violated a rule that prohibits federal contractors from employment discrimination based on race, color, religion, sex, sexual orientation, gender identity or national origin. State Street has contracts to provide financial services to the Pension Benefit Guaranty Corp, and has held more than $69 million in federal contracts since 2020.

"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," OFCCP acting director Michele Hodge said in a statement.

State Street has already made at least $483,000 in pay equity adjustments to the female managing directors who were part of the allegations. The company also agreed to set aside $4.2 million to ensure its compensation practices and policies are free of discrimination. State Street will work with a consultant to conduct a pay equity analysis across all of its offices nationwide.

"Because we already review for pay equity and make adjustments as part of our annual compensation process, we are pleased to continue doing so, and to providing reporting to OFCCP for a period of time," Ed Patterson, a State Street spokesperson, said in a statement. "The conciliation agreement with OFCCP clearly shows that the processes we have put in place to provide a fair compensation system are working."

State Street has faced federal scrutiny before over wage discrimination. In 2017, the company agreed to pay $5 million over allegations of pay disparities for women and people of color.

But the corporation has also made public efforts to promote pay equity in the past. The company has been part of the city of Boston's efforts to close the gender wage gap, and has for a long time worked to get more women and people of color into higher level positions.

Under the agreement with OFCCP, State Street will do annual trainings for recruiters and compensation personnel, and analyze whether employees are facing obstacles to advancement in the company.