The Consumer Financial Protection Board (CFPB) has replaced its five-tier performance rating system for employees with a two-tier system after racial disparities were revealed earlier this year.

According to a CFPB spokesperson, CFPB employees will receive either an “unacceptable” rating or “solid performer” rating under the new system.

Additionally, any CFPB employee who received a three or four ranking under the previous performance review system in 2012 or 2013 will be retroactively given a top score of five. Each employee will be compensated with the amount money they would have received with the highest rating.

The CFPB spokesperson said the bureau intends to complete the remediation process by the end of September, which is expected to cost more than $5 million.

“We are continuing to examine the root causes of the disparities we found.  But based on our work to date, it is clear that there was no single factor that caused this result. We also are taking the initiative to address and remedy the disparities that our system created,” CFPB Director Richard Cordray said in an e-mail to employees on May 19.

“Every CFPB employee, except senior leadership, who received a three or four summary performance rating in fiscal years 2012 or 2013 under the prior performance management program will be compensated as if his or her rating had been a five at the time of evaluation, including both merit and lump sum payments,” he added.

According to an internal CFPB report dated March 21, out of 1,173 employees reviewed in 2013, 17.4 percent received a five on their performance reviews. When broken down by race, 20.7 percent of Caucasians received a five rating, compared to 10.5 percent of black employees who received a five rating.

Conversely, 28.8 percent of all employees received a rating of three, a less satisfactory rating. Analyzed by race, 24.4 percent of Caucasian employees received three ratings, while 42.4 percent of black employees received a three.

Hispanic and Asian employees also received fewer five ratings (18.5 percent) and more three ratings than Caucasian employees (34.5 percent), the report said.

The House Oversight and Investigations subcommittee has held several hearings with former and current CFPB employees, including Senior Enforcement Attorney Angela Martin, who alleged that managers have engaged in racial and gender discrimination.

The report said 65 employees have filed complaints with the CFPB over performance reviews, including 30 men and 35 women. According to the report, 38 of the employees were Caucasian and 17 were black.

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