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In early February, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs dropped its appeal for broad access to Google’s pay records, pending a compliance review focused on alleged pay disparities affecting women.
The case stems from a 2015 Scheduling Letter that Google received from the OFCCP. The audit has largely centered around Google’s compliance with equal pay. In January 2017, the OFCCP filed a complaint with the Administrative Law Judge against Google to compel production of more compensation data and records than what was both required and submitted. Google rejected the request made by the OFCCP.
During the hearing proceedings over the case, DOL claimed they found evidence of systemic compensation disparities against women at Google. However, Google maintained they had already turned over thousands of documents and data points that demonstrate there was no evidence of such discrimination.
In July, a judge ruled in Google’s favor saying the DOL’s request was over-broad. The DOL then appealed the decision and the appeal had been pending for more than a year before it was dropped earlier this month.
According to the DOL, the recent move to drop the appeal was in accordance with a new OFCCP policy directive issued last year. In the case documents, the DOL asserts that “After careful consideration, OFCCP has decided to enforce the [Administrative Law Judge] order and complete its compliance review on the merits consistent with the terms of its newly issued directives on transparency and Predetermination Notices. OFCCP views this as the most effective means of reaching final resolution with Google.”
Google’s pay disparity case has led to bad press and a costly legal battle for the company. Specifically, Google produced significant quantities of data and documents to OFCCP at considerable cost and burden – by Google’s estimates the collection process cost $500,000 and took 2,300-person hours. Hence, OFCCP’s requests must be reasonable, relevant and material to the investigation and may not be too indefinite or broad. Instead, the OFCCP ordered Google to show cause why OFCCP should not bring an enforcement action. Eventually, the OFCCP filed its administrative action against Google. Ironically, It was only during the administrative hearing that Google learned for the first time that OFCCP was investigating potential “systemic compensation disparities against women.”
Companies shouldn’t wait for a DOL audit to discover whether they’re operating in accordance with equal pay laws. Even those companies that believe they are addressing unfair pay practices and discrimination within their organization might learn they have systems in place that are contributing to pay disparities.
Companies should conduct regular audits of their hiring processes, compensation practices and professional development programs. These audits work best when conducted by an outside party with no skin in the game. But whether done internally or externally, there are key questions that must be asked. Are women and minorities candidates being considered for higher paying positions? Are women and minority employees receiving the same compensation packages upon entry as their white male counterparts? And are these employees given the same opportunities for growth?
An audit is only as good as the steps a company takes afterwards. If disparities are discovered, a company should act to immediately address the disparities and prevent them from continuing in the future.
One way to eliminate disparities is to remove the human element from compensation systems. Companies should use formulas when determining how much to pay an employee and when to give an employee a raise. These formulas should be based on criteria like an employee’s experience and performance, not on demographic factors. Companies should also implement proactive programs to improve opportunities for women and minority employees and candidates.
Just as the OFCCP is embracing new practices to increase transparency in the auditing process, companies should increase transparency in their compensation practices. Pay disparities have been allowed to thrive largely because compensation information is not readily available to all employees. And while there are laws in place to prevent employees from being fired for inquiring about compensation practices, many still don’t have access to this information.
In addition, companies should be more transparent about the results of internal and external audits around compensation practices. Sharing the information within an organization can send a strong message to employees and boost morale. Additionally, sharing information with the public can be beneficial as well. Demonstrating a commitment to pay equity creates a positive image of your company.
Regardless of the outcome, the OFCCP audit isn’t the end of Google’s pay disparity woes. A class action gender pay suit is still pending against the company. But with these best practices, other companies can help avoid the tech company’s fate.