Man Who Took on Merrill
August 2013, brokerage giant Merrill Lynch has agreed to pay $160 million
dollars to settle a lawsuit claiming it discriminates against black
brokers that has been through the federal courts for eight years, including two
appeals to the United States Supreme Court. It was a huge deal. “The settlement
is the largest sum ever distributed to
plaintiffs in a racial discrimination suit against an American employer”,
The New York Times pointed out.
McReynolds, a longtime adviser in Nashville,
got tired of persistent racial abuses in the workplace and, in 2005, filed the
lawsuit against Merrill Lynch (which was acquired by Bank of America after the
suit was filed), the company, where he works until now. He accused the company
of providing better opportunities, as well as more compensation, for white
employees (Frumin, 2013). Later McReynolds got others on board, so the case
grew to include more than 1,200 black brokers.
central claim of the suit was that black brokers weren’t given the same
business opportunities as whites in participating on investment teams and in
account distribution,” said Suzanne Bish, a lawyer for the plaintiffs.
Brokers In The Shade
McReynolds joined Merrill Lynch’s Nashville office in 1983 as a stockbroker. He
was one of a few African Americans in the office and, after decades, McReynolds
said he noticed little things and witnessed “questionable” behavior that could
have been attributed to his race. Years later, McReynolds reached his breaking
point. After being unfairly treated, he complained to his managers. No one had
heard him. Even worse, his was downgraded to basically newbie’s position. “I
felt that I was being treated wrongly”, shared McReynolds. So, he contacted his
friend Maroc Howard in Dallas, who was aware of similar cases. Mr. Howard
advised him to take a serious step and try to solve the issue. So, McReynolds
decided to take on one of the largest corporations in America.
to the lawsuit, the company culture was “toxic” for African Americans
(DuBois, 2013). McReynolds and his lawyers provided strong statements in their
2005, there were zero African-American brokers in 552 of Merrill’s 639 offices
(all central states employed only white brokers), only about one of
every 75 brokers at Merrill was black and most of them were considered poor
Approximately 75% of African-American
“trainee” brokers left before
the training period was over.
Black brokers at Merrill said they were
excluded from company-related golf outings because they were happening at clubs that didn’t allow
African-Americans (Fuchs, 2013). Also, Merrill Lynch
sometimes relied on stereotypes, the filing also asserted, once allegedly
suggesting managers encourage black brokers to “learn to play golf or
other activities designed to learn how business gets done in manners (they)
might not be familiar with” (DuBois, 2013).
Not only did Merrill’s few black employees
have to put up with racist language, they also got paid less, according to the
complaint. The firm ranked its employees by putting them in five
“quintiles” based on the amount of money they earned from
commissions. Seventy percent of the firm’s African-American brokers with at
least 10 years of experience were in the bottom two quintiles, while white
brokers were more evenly distributed (Fuchs, 2013).
lead plaintiff, George McReynolds, said that black brokers were getting very
little help from managers and were often expelled from major projects
Lynch encouraged brokers to form teams to work together on certain cases and
let those brokers who were leaving the company hand off customers to other team
members, and blacks were generally excluded from those beneficial partnerships.
It had a disparate effect on African-American brokers. Black brokers were
rarely invited to join teams and were too widely scattered to form their own
teams. By being left out, they were being left behind (McGeehan, 2013).
worst part of the case, that Merrill has acknowledged that African-American
brokers haven’t always fared well there. Most of the times, the management
deliberately gave the encouragement to white brokers. Black brokers might have
a harder time because most of the firm’s prospective clients were white and
might not trust their wealth to brokers who were not (McGeehan, 2013).
Therefore, the company had preferred to hire white brokers.
were getting higher salary rate and larger bonuses, despite of their age,
education level or experience. Even if we talk about punishments and penalties
– white brokers rarely overtook such a fate, while black brokers were punished
most large Wall Street firms, Merrill Lynch has been dominated by white people.
All lead positions were given to white brokers as well. They were getting best
benefits and bonuses. They were the main representatives of the company.
Meanwhile, black brokers, those few who were there, stayed in the shade,
excluded from any major events and projects.
Payout On Discrimination Settlement
years after a group of black financial advisers filed a lawsuit claiming that
their managers systematically were praising white employees, Merrill Lynch was required
to pay the largest racial discrimination settlement ever.
August of 2013, a settlement from Merrill Lynch, which had been acquired by
Bank of America, came down, awarding the plaintiffs $160 million as well as an
agreement to establish stricter requirements for attaining and retaining
African-American brokers. It was the largest settlement for a racial employment
discrimination suit in U.S. history. The company didn’t admit to any
wrongdoing, or acknowledge that discrimination took place, but says the
agreement is a good step for all parties. “This is a very positive resolution
of a lawsuit filed in 2005. These new initiatives, developed in partnership
with African-American financial advisors and their legal team, will enhance
opportunities for financial advisors in the future,” said Merrill Lynch
representative Bill Halldin in a statement to UPTOWN (Allen, 2014).
Social Contract Theory View On The Racial Discrimination At The Workplace
The Social Contract Theory of Morals, nearly as old as
philosophy itself, is the idea that morality consists in the set of rules,
governing how people are to treat one another, that rational people will agree
to accept, for their mutual benefit, on the condition that others follow those
rules as well (Rachels, p. 145).
Hobbes, the leading British philosopher who established The Social Contract
Theory, tried to show that morality should be understood as the solution to a
practical problem that arises for self-practical human beings. We all want to
live as well as possible; but none of us can flourish unless we have a
peaceful, cooperative social order. And we cannot have a peaceful, cooperative
social order without rules. The moral rules, then, are simply the rules that
are necessary if we are to gain the benefits of social living. Hobbes wrote: “The
passions that incline men to peace, are fear of death; desire of such things as
are necessary to commodious living; and a hope by their industry to obtain
them. And reason suggesteth convenient articles of peace, upon which men may be
drawn to agreement”. According to Hobbes, such an agreement exists, and it
makes social living possible. This agreement, to which every citizen is a
party, is called the social contract.
Martin Luther King, Jr., one of the
greatest fighters for African-American civil rights, was standing for human
equality and against discrimination of black people. He strongly described the
frustration and anger of his people: “when you
have seen vicious mobs lynch your mothers and fathers at will and drown your
sisters and brothers at whim; when you have seen hate-filled policemen curse,
kick, brutalize and even kill your black brothers and sisters; when you
suddenly find your tongue twisted and your speech stammering as you seek to
explain to your six-year-old daughter why she can’t go to the public amusement
park that has just been advertised on television, and see tears welling up in
her eyes when she is told that “Funtown” is closed to colored children, and see
the depressing cloud of inferiority begin to form in her little mental sky, and
see her begin to distort her little personality by unconsciously developing a
bitterness toward white people; when you are humiliated day in and day out by
nagging signs reading “white” and “colored” (Rachels, p. 153). That’s what was
happening when basic moral rules were not followed by all.
Merrill Lynch failed to observe one of the most important moral rule created by
society – rule of human equality; it was not
followed, so the social contract was broken. If black brokers were given equal chances to grow in their career as
white colleagues, if they were getting the same benefits and bonuses, if they
were treated with the same respect, – then we would say that social agreement