Payment processing giant Mastercard has agreed to pay $26 million to settle claims that it systematically underpaid female, Black, and Hispanic employees across the US, according to court documents filed on Tuesday.

The proposed settlement, which requires court approval, covers approximately 7,500 workers and includes commitments by the company to reform its employment practices through annual pay audits and workplace bias assessments.

The lawsuit, filed in the U.S. District Court for the Southern District of New York, alleges that Mastercard routinely placed women and workers of colour into lower-paying positions despite their qualifications. According to the legal filing, in 2023 Black and Hispanic employees' median pay was 94.3 per cent of that received by white employees, while women earned 96.4 per cent compared to their male colleagues.

"The non-monetary terms of the settlement will help ensure that Mastercard maintains an equitable workplace for the thousands of women and people of colour it employs," said Cara Greene, partner at Outten & Golden and lead counsel for the plaintiffs. "Settlements like this help to level the playing field and move the entire industry closer to pay equity."

As part of the agreement, Mastercard will hire external consultants to conduct annual pay audits for three years and bring in an industrial psychologist to evaluate potential bias in what the court filing describes as the company's "career ecosystem."

While agreeing to the settlement, Mastercard denied any wrongdoing. "We strongly disagree with the allegations in the litigation and believe it is in the best interest of all involved to bring this matter to a close," said Seth Eisen, a spokesperson for Mastercard. "It's essential that we have a workplace where all employees feel valued, respected and empowered to reach their greatest potential."

The settlement covers employees who worked at Mastercard from as far back as September 2016, though specific timeframes vary by state. The agreement was filed simultaneously with the lawsuit, which is a common practice that allows for formal class certification and court oversight of settlements.

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