Bank of America is facing a lawsuit filed by a former financial adviser alleging the bank breached its 2013 racial bias settlement by enforcing a mandatory arbitration policy that restricts employees from filing discrimination claims in court. The complaint was submitted to a federal court in Manhattan.

Katherine Mackey, the plaintiff, challenges a policy introduced in November 2024 that requires employees to resolve claims of discrimination and harassment through arbitration administered by JAMS, a private dispute resolution service. Mackey contends that this policy conflicts with the terms of the 2013 settlement, which resolved allegations of racial bias involving hundreds of Black brokers and resulted in a $160 million payout.

During her tenure at Merrill Lynch, a Bank of America subsidiary, Mackey claims she experienced gender and age discrimination as well as harassment. She further alleges that the company imposed accelerated deadlines on her and ultimately terminated her employment in 2025. Through the lawsuit, she seeks to nullify the arbitration requirement, aiming to bring her claims before a federal court.

The arbitration policy at the center of the dispute has drawn criticism for potentially undermining employees’ ability to pursue court cases. Arbitration forums typically offer businesses advantages such as confidentiality, reduced litigation costs, and the avoidance of class-action lawsuits.

The law firm representing Mackey played a role in negotiating the original 2013 racial bias settlement. However, the firm did not immediately respond to requests for comment on the current lawsuit. This legal development underscores ongoing challenges related to workplace discrimination and employee rights within major financial institutions.