McReynolds v. Merrill Lynch & Co.

Case Updates

The Seventh Circuit decided that the district court’s dismissal of the brokers’ claims was proper and that the effects of past discrimination are not relevant to the lawfulness of production-based compensation systems.

The U.S. Chamber urged the Seventh Circuit to hold that employers cannot be held liable for alleged discriminatory compensation practices under Title VII when they utilize an objective, merit-based system. In this case, African-American Financial Advisors at Merrill Lynch alleged that an employee retention bonus program unfairly discriminated against African-Americans, despite the awards being calculated according to a precise production-based mathematical formula. In its amicus brief, the U.S. Chamber argued that such formulaic, merit-based compensation programs are permitted under Title VII, and are used by many businesses across many industries. Furthermore, such programs offer a “Win/Win” for employees and employers. Employees gain greater control over their own income, and are incentivized to be more successful. Likewise, companies are more likely to succeed when strategy and employees’ interests align.