OFCCP Lawsuit Against Oracle Highlights the Financial Risk of Not Complying with Equal Pay Regulations

The pay discrimination lawsuit filed by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFFCP) against tech giant Oracle is back in the news after the federal agency sought leave to file an amendment to the original complaint.

At risk are $100 million in federal government contracts that the OFFCP is asking the court to terminate because Oracle did not meet its obligations to provide equal pay and employment opportunities to all its employees, as well as hundreds of millions of dollars in back wages.

The OFCCP filed a lawsuit against Oracle in 2017 alleging that the tech giant systematically discriminated against minorities and women from 2013 to 2016, amounting to compensation losses of more than $400 million for these employees. The lawsuit was stayed as a dispute over the specifics of the charges and the data to be provided by Oracle played out in court. Additionally, the appointment of a new administrative law judge (“ALJ”) put the case on hold until earlier this year. The OFCCP submitted a filing in which it seeks to amend the lawsuit this year to further clarify and simplify its case against Oracle.

The new filing, which, if granted, would be an amendment providing greater detail on the allegations that Oracle systematically discriminated in compensating female, Black, and Asian employees by (1) relying on prior salary in setting initial pay; and (2) channeling female, Black, and Asian employees into lower paid careers. The amendment stated, “Oracle’s suppression of pay for its non-White, non-male employees is so extreme that it persists and gets worse over long careers; female, Black and Asian employees with years of experience are paid as much as 25% less than their peers.”

The proposed new amendment also explains in greater detail how Oracle’s college and university hiring practices resulted in hiring decisions favoring Asian graduates. The amendment notes that the preference for Asian students was “so strong, that of the approximately 500 college and university hires made by Oracle from 2013 to 2016, approximately 450, or 90%, were Asian.”

The OFCCP said that Oracle’s focus on hiring Asian graduates, particularly those holding work visas, was because it could underpay them as employees. The practice also resulted in the refusal to hire more than 100 qualified non-Asian job applicants.

The amended complaint also alleges that Oracle destroyed data: “It also clarifies that data is missing due to Oracle’s refusal to keep, maintain and produce critical required information. Tellingly, discovery revealed that not only did Oracle refuse to produce key document and data it was required to keep during the compliance review and in discovery – it destroyed records relating to its hiring process as the case was ongoing.”

The OFCCP lawsuit against Oracle provides real proof to federal contractors that failing to live up to required equal pay and employment obligations under federal contracts can have significant impacts, not only the possibility of losing millions of dollars in contracts, but also the costs of defending your position in court.

Federal contractors are not the only ones at risk. States and municipalities are beginning to require contractors to follow more stringent state and local guidelines on equal pay.

For example, the San Diego Equal Pay Ordinance (EPO) requires contractors and subcontractors working with the city to keep records of their wages, rates, and hours to justify equal pay. If the city determines that a contractor or sub-contractor has violated the EPO, the city issues a Notice to Cure, giving them 30 days to remedy the violation. If the violation is not remedied, the city can cancel, terminate, or suspend a contract in whole or in part, in addition to imposing any penalties drafted into the contract.

Organizations should be aware of federal laws surrounding the equal pay if they want to avoid potential contract loss, expensive penalties, and bad PR. Paying attention to the state level laws would also be beneficial as more states enact more assertive pay equity laws on equal pay, equity, salary history bans, and banning consideration of past criminal records.

Equally important is record-keeping so that contractors can produce the necessary documentation to show that they are meeting the requirements of equal pay laws.

Best practices suggest taking a proactive approach to the pay equity movement by proactively conducting a pay equity audit. This type of audit will tell you whether contractors have a pay equity issue that needs to be addressed. The process also identifies where there may be issues with company records that contractors may be required to produce to government agencies.

To learn more about achieving pay equity, click here.