Oracle allegedly underpaid thousands of women and minority employees by $401 million over four years, according to a document filed Tuesday by the US Department of Labor, as part of an ongoing discrimination lawsuit against the software giant.
In the document, the Labor Department also claims that Oracle strongly prefers hiring Asians with student visas for certain roles because they are “dependent upon Oracle for sponsorship in order to remain in the United States,” so the company can systematically underpay them. Between 2013 and 2016, the department says, 90 percent of the 500 engineers hired through its college-recruiting program for product development jobs at its headquarters in California were Asian. Over the same four years, only six were black.
Once they are employed, Oracle also systematically underpays women, blacks, and Asians relative to their peers, the complaint claims, alleging that these disparities are driven by Oracle’s reliance on prior salaries in setting starting salaries and the company’s practice of steering black, Asian, and female employees into lower paid jobs. The department says some women were underpaid by as much as 20 percent compared with their male peers, or $37,000 in 2016.
“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 percent less than their peers,” according to an updated complaint filed Tuesday. “Oracle’s compensation practices cause an increasing pay gap as those employees devote more of their lives to Oracle.” The Labor Department began investigating because Oracle has government contracts worth more than $100 million a year.
In a statement on Wednesday, Oracle General Counsel Dorian Daley said the lawsuit is "meritless," based on false allegations, and "relies on cherry picked statistics rather than reality. We fiercely disagree with the spurious claims and will continue in the process to prove them false. We are in compliance with our regulatory obligations, committed to equality, and proud of our employees.” 1
The document says Oracle underpaid more than 1,200 female employees by $165 million, more than 2,700 Asian employee by $234 million, and a smaller number of black employees by $1.3 million. The government’s case looks primarily at employees in product development, IT, and support roles at Oracle’s Redwood City, California, headquarters. In 2014, the department says, Oracle employed 7,500 of its 45,000 US employees at the Redwood City office. The agency claims that the total cost of Oracle’s discriminatory practices are likely “much higher” than $400 million because the company’s discrimination has continued since 2016.
The government’s allegations against Oracle echo those in a private lawsuit by former Oracle employees who say the company discriminated against them on the basis of sex. On Friday, lawyers for that group alleged in a new court filing that Oracle paid women $13,000 less than men in comparable jobs with comparable experience, based on expert analysis of Oracle’s pay data.
Pay equity is an increasingly high-profile issue in Silicon Valley, part of a broader examination of race and gender discrimination in hiring, promotion, and funding, as well as sexual harassment. When 20,000 Google employees walked out to protest the company’s practices in November, pay equity was ranked second in their list of demands.
The government lawsuit, which began in January 2017, was filed by the department’s Office of Federal Contract Compliance Programs and will be decided by an administrative law judge. The OFCCP is demanding that Oracle pay injured employees and applicants for lost wages and to correct discriminatory practices, including additional hiring.
But a bigger threat to Oracle may be the OFCCP’s demand to cancel all of Oracle’s government contracts and to bar the company from future contracts until it complies. The same office sued Google, which is also a federal contractor, for discrimination against women, alleging systemic bias against female employees. That case has been delayed while the two sides argue over how much pay data the government can get from Google.
Annual diversity reports published by major Silicon Valley companies show low numbers of under-represented minorities. In the four years since they began sharing the information, there has been little progress in improving those ratios to reflect the diversity of the industry’s billions of consumers around the world. Employers often allege that the numbers stem from a shortage of qualified candidates.
The OFCCP’s claims about systemic race discrimination at Oracle are based on comparing the number of recent college graduates of a particular race hired by Oracle versus the number of graduates at the schools where Oracle recruited and who had the degrees Oracle targeted.
However, the agency says its figures are incomplete because, it says, Oracle did not track race or ethnicity for the majority of applicants and deleted data requested by the Labor Department, including an email inbox where college recruits submitted their resumes. “There is a presumption that the information Oracle has refused to produce or destroyed was unfavorable to Oracle,” the complaint says.
Oracle tried to dismiss the Labor Department’s case based on the method for choosing administrative law judges. But last week, an administrative law judge ruled against Oracle.
1 UPDATED, Jan. 23, 4:40 PM: This article has been updated with a statement from Oracle.
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