Oracle’s equal pay saga illustrates how a proactive pay equity strategy is better than adopting a reactive approach—to the tune of millions of dollars, as well as bad publicity.
Earlier this year, we discussed how Oracle was in the crosshairs of the Office of Federal Contract Compliance Programs (“OFCCP”), the federal agency housed within the Labor Department and charged with enforcing equal employment opportunity laws for businesses with government contracts. Oracle is a federal contractor with tens of millions of dollars in government contracts. Yet, according to the OFCCP, Oracle underpaid female, Asian and Black employees by $401 million over the course of four years, as reported in the Washington Post.
What’s more is that the OFCCP also claimed that Oracle destroyed data. In its amended complaint, the government “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 documents 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.”
This situation was further compounded when the company filed a lawsuit alleging that the government’s enforcement authority is unlawful and unconstitutional. “Oracle filed this case because it is being subjected to an unlawful enforcement action by the Labor Department utilizing a process with no statutory foundation whatsoever,” said Ken Glueck, Oracle executive vice president, in a press release. Both the government’s equal pay case against Oracle and Oracle’s suit against the government are ongoing.
Oracle’s equal pay saga highlights an organization that, whether or not the company is ultimately vindicated in court, is perceived as having dug its heels into a reactive approach to pay equity. And the costs are high, both in terms of legal fees and bad publicity. As HR Unlimited observed in a post about the Oracle/OFCCP saga, Oracle’s costs for fighting the OFCCP topped $3,000,000 for an expert witness alone, not to mention attorney fees. At the same time, a California state court is allowing a class of more than 4000 women who are former Oracle employees to move forward with a separate gender pay discrimination lawsuit. Finally, as Forbes observed in an article entitled A Tale of Two Pay Gaps: Citi versus Oracle, Citi released its pay gap analysis and took actions to address it, while Oracle refused to disclose it. Then the author dropped the hammer: “The reality is, until there are more companies like Citi and fewer like Oracle, closing the gender pay gap will continue to be just another job for women.”
Employers should take note as to how adopting a proactive approach to pay equity now can save time, money, and reputational injury later. Experts across multiple industries recommend conducting a pay equity audit. This type of audit will tell you whether businesses have a pay equity issue that needs to be addressed. A pay equity audit not only helps identify any pay disparities, it brings to light the value of data quality. A recent report by Harvard Business Review Analytic Services, 90% of U.S. employers are planning, considering, or already performing internal pay equity audits.