The United States Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) on January 17, 2017, just days before the inauguration of President Donald Trump, filed a lawsuit against Oracle America, Inc. (“Oracle”), alleging discrimination in its compensation and hiring practices, and its refusal to produce requested records and data. See Complaint. The lawsuit, filed with the Office of Administrative Law Judges, stems from a compliance review initiated by the OFCCP on September 24, 2014 at Oracle’s Redwood Shores headquarters in California, housing 7,000 employees.

As a federal government contractor, subject to Executive Order 11246, the Rehabilitation Act and the Vietnam Era Veterans’ Readjustment Assistance Act, Oracle is contractually obligated not to discriminate in employment on the basis of certain protected characteristics, which include race, color, religion, sex, sexual orientation, gender identity, national origin, disability, and status as a protected veteran. In addition, Oracle is required to take affirmative action to ensure that applicants and employees are afforded employment opportunities without regard to these protected characteristics. As part of its contracts with the federal government, Oracle also agrees to allow the OFCCP to inspect its employment records to ensure the company’s compliance with its non-discrimination and affirmative action obligations.

The lawsuit seeks to redress violations of Executive Order 11246 stemming from the tech giant’s alleged “systemic compensation discrimination” against qualified women, Asians and African Americans employed in Information Technology, Product Development and Support positions (encompassing 80 job titles), and its “pattern and practice of hiring discrimination” against qualified White, Hispanic and African American applicants in favor of Asian applicants, namely Asian Indians, in the Professional Technical 1, Individual Contributor and the Product Development job groups (involving 69 job titles). The OFCCP specifically alleged that there were “gross disparities in pay” and “[statistically] significant overrepresentation” of Asians in the applicant pools and affected positions. In making its findings, the OFCCP indicated that Oracle refused to produce prior year compensation data and complete hiring data, and further refused to produce documentation demonstrating that it had performed “an in-depth review of its compensation practices” and that it had analyzed its applicant-hiring data for adverse impact.

Having found discrimination, the OFCCP issued a Notice of Violations, and three months later a Notice to Show Cause seeking an explanation for why the agency should not initiate enforcement proceedings. Seven months later, after conciliation efforts failed, the OFCCP instituted the instant action. While only Oracle and the OFCCP know what was discussed and debated in an attempt to bring about a resolution, clearly the OFCCP was not satisfied with Oracle’s explanations justifying the pay disparities and hiring practices, nor pleased with the company’s refusal to produce the additional compensation and hiring data requested. As a result, the OFCCP is seeking a decision finding that Oracle’s compensation and hiring practices violated Executive Order 11246, and an order permanently enjoining the company from failing and refusing to comply with its obligations, cancelling its federal government contracts, debarring it from entering into future contracts until remedying its prior noncompliance, and requiring it “to provide complete relief to the affected classes, including lost compensation, interest and all other benefits of employment resulting from Oracle’s discrimination.” Simply put, there are millions of dollars at stake.

Action Steps Employers Should Take Now

While it is still unclear what agenda the Trump Administration will expect the OFCCP to follow, so long as the status quo remains, federal government contractors should take heed. The OFCCP clearly intends to send a message with this and other lawsuits recently filed. Contractors should therefore be proactive to ensure that their compensation practices are not causing significant pay disparities that cannot be justified. They also need to ensure that their hiring practices are such that they are considering a diverse slate of candidates drawn from well-balanced recruiting pools and making hiring decisions without regard to gender, race and ethnicity. Both can be accomplished by contractors engaging counsel to conduct self-audits to ensure that they are in compliance and meeting all of their non-discrimination/affirmative action obligations as a federal government contractor. If such action is not taken, then they may face the same level of scrutiny and consequences as Oracle.