Tech giant Oracle Corp. is guilty of shortchanging women and minority workers $400 million in the form of wages, according to a new legal filing by the U.S. Department of Labor (DOL).
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The allegations stem from a random 2014 audit by the DOL’s Office of Federal Contract Compliance Programs (OFCCP), which enforces equal pay and other nondiscrimination requirements for federal contractors. The OFCCP first sued Oracle in January 2017.
Aside from the big number the DOL is alleging, the case is interesting because it demonstrates some potential pitfalls for other companies when it comes to wage setting and career development.
Using Pay History to Set Wages
One of the allegations leveled against Oracle is that the company pays women, black, and Asian employees less than others for doing similar jobs in information technology, product development, and support.
The DOL alleges that this is due at least in part to Oracle relying on workers’ previous pay histories to determine starting salaries.
Different Career Paths
The DOL also alleges that Oracle effectively handicaps women and minority applicants from the start by putting them into low-level jobs with low starting pay. Their career paths, consequently, lead to lower paying jobs compared with male colleagues, creating a gap that just keeps getting bigger.
H-1B Visas Holders
Finally, the DOL alleges that Oracle uses a recent college graduate hiring program to seek out large numbers of Asian H-1B visa holders. H-1B visas allow U.S. employers to temporarily hire foreign workers in specialized occupations.
The DOL argues that Oracle abuses the program to deny equal employment opportunity to non-Asian applicants because it can more easily underpay the H-1B holders.
It’s important to keep in mind that the allegations in the DOL filing are just that at this point—allegations. Oracle denies it acted inappropriately or discriminatorily, and when Oracle previously pushed back against such allegations from the DOL, an administrative law judge ordered the DOL to provide additional information.
But even if Oracle is ultimately found to have acted within the bounds of the law, this will be an expensive legal battle that demonstrates the potential dangers companies face if they skate too close to the line when it comes to labor and employment laws.