By Jim Paretti, a Shareholder with Littler Mendelsohn PC in the firm’s Washington, DC office, and Michael J. Lotito, a Shareholder in the firm’s San Francisco, CA and Washington, DC offices.
With so much of our public attention focused on the presidential election, and efforts to address the economic and public health devastation wrought by the COVID-19 pandemic, it is easy to overlook significant developments that might have garnered more attention in “normal times.” Such is the case with the September 2020 decision in favor of Oracle Corporation after a four-year long battle with the U.S. Department of Labor (DOL)’s Office of Federal Contract Compliance Programs (OFCCP) alleging that the tech giant discriminated in compensation against women and minorities.
By way of background, OFCCP audited the California-based technology company in 2014, and filed suit in the final days of the Obama administration in 2017, alleging that the company owed female and minority employees $400 million in wages. A trial before Administrative Law Judge (ALJ) Richard Clark was held in December 2019, with extensive post-trial briefing. In late September, the ALJ, in a decision nearing 300 pages, ruled that OFCCP had failed to meet its burden of showing that Oracle engaged in any discriminatory conduct, and recommended that the case be dismissed. In his order, the ALJ made a number of specific findings, notably that:
- Oracle did not engage in intentional compensation discrimination (wage-rate, salary, or total compensation) at its headquarters facility during the relevant time period against female employees in the Product Development, Information Technology, and Support job functions; or against Asian and African American employees in the Product Development job function.
- Oracle did not have a policy or practice at its headquarters facility during the relevant time period of relying on prior pay in salary setting and OFCCP did not show a disparate impact attributable to such a policy on female employees in the Product Development, Information Technology, and Support job functions; or on Asian and African American employees in the Product Development job function.
- Oracle did not engage in assignment, job classification, or steering discrimination (that is, steering employees to lower-paying positions) at its headquarters facility during the relevant time period against female employees in the Product Development, Information Technology, and Support job functions; or against Asian and African American employees in the Product Development job function.
The ALJ concluded that the statistical evidence presented by OFCCP failed to support the allegation that the company engaged in any pay discrimination, or that company officials ignored widespread disparities in pay: “Most importantly, the statistical evidence offered does not support an inference that Oracle is discriminating, or that there are disparities to be explained by either a pattern or practice of discrimination or a policy or practice of relying on prior pay.” Finally, the ALJ concluded, an analysis of Oracle’s compensation data did not consider “major” lawful non-discriminatory factors, which may have contributed to pay disparities, but instead made “powerful but unwarranted assumptions.”
In that light, it bears note that OFCCP lost a similar case in 2019, in which a different ALJ found that statistical evidence of alleged bias presented by the agency “did not show any difference in female wages that was statistically significant such that any difference could not be attributed to chance or random fluctuation.”
The full impact of the Oracle decision is not yet clear. In its wake, commentators and practitioners have suggested that OFCCP may need to revisit its statistical methodology. Others have called for OFCCP to more closely align its statistical analysis with those utilized under Title VII of the Civil Rights Act of 1964, which broadly prohibits wage discrimination on the basis of race or sex in the private sector.
In the broader scheme, the future trends of OFCCP enforcement will be, like so many labor and employment policy matters, directly impacted by the outcome of the presidential election, the results of which were not final as this Legal Opinion Letter went to press. If President Trump has been reelected, it is likely that OFCCP will be more focused on employer assistance and compliance, rather than enforcement by way of litigation. Conversely, if Vice President Biden is being inaugurated in January 2021, we may see the agency take a more aggressive stance, and more likely to litigate.
Other broad OFCCP policies will also be implicated by the election. In September 2020, the White House issued an executive order regarding diversity and inclusion training used by federal contractors. The order aims to prevent federal contractors from using diversity and inclusion training materials that foster “stereotyping” or “scapegoating” on the basis of race or sex. In October 2020, the agency issued a Request for Information asking a number of questions and seeking to review training materials from federal contractors regarding diversity and inclusion initiatives. It also set up a hotline for employees who feel their employer’s training may violate the executive order. The order raised significant concern in the contractor community, and employers that are federal contractors and conduct diversity and inclusion training may wish to consult with counsel.
If, as it appears likely, former Vice President Joseph Biden assumes office as the 46th President of the United States in January 2021, his administration would probably act quickly to repeal the executive order, and instead focus OFCCP’s efforts on other priorities. The outcome of congressional elections may also have an impact on pay discrimination legislation and enforcement. It is now clear that we will not know which party controls the Senate until early January, as runoff elections for two Senate seats in Georgia will be held on January 5, 2020. At present, it appears Republicans will hold at least 50 seats, and Democrats at least 48. If Democrats are able to win both Georgia seats, they would have effective control of the Senate, as Vice President Harris would cast tie-breaking votes. If Republicans hold at least one of the Georgia seats, they will retain control of the Senate in the next Congress, which would likely mean that far-reaching pay-discrimination legislation will not be passed.
Finally, even if Congress does not act on pay discrimination matters, we can expect states (particularly those states where Democrats control the governorship and both houses of the state legislature) to be active in this area. In 2020, we have already seen a number of states adopt new laws intended to increase pay equity and reduce pay discrimination. California, for example, will require employers to submit detailed information on their employees’ compensation beginning in March 2021. Colorado has proposed extensive requirements for employers relating to job postings that would require employers to provide information about ranges of pay to eligible employees. It is likely 2021 will see these state-level efforts continue, if not increase.