A former senior manager at KPMG has filed a proposed $350 million class-action lawsuit against the firm alleging a pattern of gender discrimination that has prevented women from being promoted to leadership positions.

The lawsuit was filed Thursday by Donna Kassman, 54, who worked in KPMG’s New York offices for 17 years. She resigned after she was denied a promised promotion and had her salary cut by $20,000 when she went on maternity leave. The firm allegedly told her she was being paid “too much” and when she asked about ways to earn back the $20,000, her male supervisor allegedly told her she did not need the money because she “had a nice engagement ring.”

When she complained about her treatment at the firm and the promotion she was denied, her supervisors suggested that she attend more “happy hours” with her colleagues. She was also advised that her tone was “too direct” and she was “unapproachable.”

The lawsuit alleges that KPMG engages in systemic discrimination against its female managers, including senior managers and managing directors. The plaintiff's attorneys are seeking class-action certification for the lawsuit.

The firm denies the allegations. “KPMG is recognized as a leader for its strong commitment to supporting women in the workplace,” said KPMG spokesman George Ledwith. “In fact, among the Big Four accounting firms, KPMG is tied with the highest percentage of women partners. We believe this lawsuit is entirely without merit.”

He pointed out that the firm has received numerous awards for its diversity, including from Catalyst, Working Mother magazine, and Diversity Inc., and it has women in leadership positions, including national managing partner for diversity and corporate responsibility, national managing partner for advisory, and national partner-in-charge of operations. Women represented 24 percent of the firm's most recent partner classs, Ledwith noted, and 51 percent of its campus hires were women. The firm also has a number of internal programs, including a KPMG Network of Women that was established in 2003, a grass-roots program to support women and help foster their careers that has expanded to local chapters in approximately 60 offices across the country.

However, the lawsuit contends otherwise. “Women are conspicuously absent from KPMG’s leadership,” the lawsuit noted. “Among the 20 members of KPMG’s global executive team, only one, or 5 percent, is female. Similarly, of the 24 members of the global board, only one, or 4 percent, is female.”

The suit noted that while KPMG’s workforce is approximately 50 percent female, less than one in five partners are female. Managing directors are also predominately male, despite the fact that women have entered the accounting profession in record numbers in recent decades, according to a study on women in accounting by Catalyst. In 2009, women made up 55 percent of newly hired graduates and 61.8 percent of all accountants and auditors, according to the American Institute of CPAs. But despite comprising half the workforce at accounting firms for decades, women are only 23 percent of all partners industry-wide and only 18 percent at KPMG, according to the Catalyst study. The suit also noted that KPMG promotes fewer women to senior manager (35 percent) than the industry average of 44 percent.

The lawsuit was filed in the U.S. District Court for the Southern District of New York. Kassman is represented by Janette Wipper, Siham Nurhussein, and Deepika Bains of the law firm Sanford Wittels & Heisler LLP. The firm said the lawsuit is intended to change KPMG’s discriminatory pay and promotion policies and practices, as well as its systemic failure to properly investigate and resolve complaints of discrimination and harassment. The suit was filed on behalf of a class of thousands of current and former female employees who have worked as managers at KPMG from 2008 through the date of judgment.

“Across the accounting industry, women are conspicuously absent from leadership positions, but at KPMG, women fare even worse,” said Wipper. “As soon as women come within reach of partnership, the company’s male-dominated owners find ways to block their advancement.”

Despite Kassman’s long tenure and “stellar” track record at the firm, KPMG failed to promote her along the partnership track, according to the lawsuit. Her supervisors repeatedly told her in 2008 and 2009 that she was next in line for a promotion to managing director. Around the time she was to be promoted, however, two male employees complained that she was “unapproachable” and “too direct,” according to the lawsuit. Based on these comments, KPMG removed Kassman from the promotion track, subjected her to numerous interrogations, and advised her to meet with a “coach” to work on these supposed issues. Instead of disciplining the two male employees for their harassment, KPMG rewarded them by putting them up for promotion, claimed the lawsuit.

KPMG’s female managers are not only under-promoted, but underpaid as well, the lawsuit alleged.

“Unfortunately, Ms. Kassman’s story is completely representative of the treatment of women at KPMG,” said Nurhussein. “Ms. Kassman repeatedly complained up the chain of command about the gender discrimination and harassment she was experiencing, and the company reacted with neither surprise nor concern. Her supervising partner told her matter-of-factly that her male colleague might have a problem working with women, and the Office of Ethics and Compliance told Ms. Kassman that men had ganged up on women at KPMG before. KPMG not only tolerates gender discrimination, but displays an active interest in perpetuating it.”

In addition to the discrimination faced by female managers at KPMG, female employees with children also face discrimination based on their status as caregivers or expectant mothers, the lawsuit claimed. After she gave birth to her first child, Kassman’s career advancement at KPMG came to a halt. Without any warning or provocation, KPMG abruptly cut her salary while she was on maternity leave and placed her on a “performance improvement plan” upon her return to work.

Kassman felt that she had no choice but to move to a “flexible” work schedule, under which she retained all the responsibilities of a full-time employee, but was paid less. KPMG frequently touted her as a role model for other working mothers, even though one of the partners acknowledged that women on flexible schedules were “not going to get anywhere” at KPMG. The lawsuit alleges that many female employees at the firm feel pressured to move to a flexible work schedule after having children because of a stereotype that they are less effective employees and less committed to their careers.

Kassman resigned from KPMG in October 2010 because the gender discrimination and harassment had become unbearable to her, and it was clear to her that the firm had no interest in remedying the situation.

“As one of the Big Four, KPMG helps set the industry standard and pervasive discrimination against women should not be any company’s standard,” said Bains. “Our hope is that as a result of this lawsuit, women will be able to join KPMG with greater opportunity for success.”

Kassman is seeking declaratory and injunctive relief for herself and the class, including back pay and front pay; compensatory, nominal, and punitive damages; and attorneys’ fees, costs and expenses.