A recently revived suit brought by the Office of Federal Contract Compliance Programs highlights the Trump Administration’s continuing focus on tech contractors. As we discussed in an earlier Labor and Employment Alert, the OFCCP targeted information technology companies in its fiscal year 2018 proposal.

The OFCCP’s suit against Oracle America Inc., a major federal contractor, was refiled in amended form with the U.S. Department of Labor on Jan. 22, alleging that Oracle’s discriminatory practices against female, black, and Asian employees resulted in more than $400 million in lost wages from 2013-2016. The suit alleges that Oracle systematically underpaid female, black, and Asian employees relative to their peers, and steered them to low-level positions and low starting pay, resulting in reduced compensation throughout the course of their careers.

What’s more, the OFCCP claims that Oracle engaged in reverse discrimination by displaying a strong preference for hiring Asian recent college graduates, the vast majority being international students on visas.

Oracle, which annually contracts over $100 million with the federal government, is subject to specific anti-discrimination requirements as a condition of its receipt of taxpayer money. Under Executive Order 11246, as amended, federal contractors and subcontractors are prohibited from discriminating on the basis of race, religion, sex, sexual orientation, gender identity, or national origin, and must engage in certain affirmative action efforts to ensure equal employment opportunity.

In targeting Oracle, the OFCCP has highlighted patterns seen across many tech companies, namely, the prevalence of foreign national Asian college graduates and the dearth of women and minorities. Some of the most dramatic statistics that the OFCCP cited as part of the data analyzed for its amended pleading include:

• from 2013 to 2016, 90 percent of college and university hires were Asian
• no black or Hispanic recent graduates were hired in recent years
• there is a set hiring quota of recent graduates from schools in India

With respect to the discriminatory pay practices, the OFCCP claims that these may begin at hire, alleging that women and Asians are paid less upon hire, either by providing lower pay or by hiring them specifically for lower-paid jobs. The data supplied in the amended pleading shows that the underpayment of female, Black or African American, and Asian employees gradually worsened throughout their employment by Oracle, guaranteeing their station in lower-paid positions relative to their peers.

The OFCCP’s aggressive targeting of tech contractors as seen in this revived litigation (and on the heels of recent litigation and settlements with other tech industry giants) should give hiring managers and human resources professionals reason to pause. Due to the significant liability that can be incurred if a company fails to comply with the Affirmative Action Plan (AAP) obligations, federal contractors should:

DEVELOP hiring practices that are free from any consideration of race, color, religion, sex, sexual orientation, gender identity or national origin (and, if in a jurisdiction with more expansive protections, discrimination against those other protected categories should also be banned);

CONDUCT regular internal audits to ensure that job titles are not disproportionately skewed based on one or more protected classifications;

AUDIT compensation plans regularly and address pay inequities to ensure that minorities and/or women are not being improperly underpaid;

ENGAGE in affirmative action in recruitment and retention by consulting with, among others, legal counsel and affinity-based professional organizations that can provide a pipeline for underrepresented candidates in the Science, Technology, Engineering, and Mathematics (STEM) fields;

SET compensation based on experience, qualifications, and maintain consistency with similarly situated employees, and not on prior salary history that tends to perpetuate wage disparities for minorities and women;

ENSURE that foreign employees are not being recruited to perpetuate wage depression; and

IMPLEMENT meaningful managerial pipeline programs to retain and advance underrepresented employee populations within the company.

Where contractors have questions regarding their AAP obligations and/or when conducting a compensation analysis to determine if pay inequities exist, experienced counsel should be retained in order to preserve the attorney-client privilege.

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