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May 26

Claiming to Close the Gender Pay Gap, Google Opens the Door to Potential Liability

By Brian S. Kabateck and Natalie S. Pang

Days after Google proudly congratulated itself on Twitter for closing the gender pay gap globally, the Department of Labor accused the company of “systemic compensation disparities” in pay “pretty much across the entire workforce.” In vehement denial of these accusations, Google has stated that in conducting its relevant annual analysis, it has not found any evidence of such a pay gap. Despite the tech titan’s denial, the explosive allegations leave Google vulnerable to penalties and lawsuits claiming the company engages in gender discrimination and at the same time, raises questions about the clarity of the Equal Pay Act.   

The case was initially prompted by Google’s refusal to turn over certain employee compensation information for an audit in late 2015, citing privacy reasons. The Department of Labor is now moving to compel Google to produce this same salary information. While the Department of Labor has not yet disclosed how it reached its allegations, their findings will undoubtedly open the door to further scrutiny of Google, other big tech companies and potential penalties and civil liability. In light of a spate of recent discrimination lawsuits brought against Silicon Valley companies, it seems likely that former and current female Google employees will bring a class action lawsuit against Google.

The Department of Labor has subjected Silicon Valley companies to increased scrutiny in recent months. In late 2016, the Department of Labor filed a lawsuit against Palo Alto-based software company Palantir, alleging a pattern of discrimination against Asian job applicants. In January 2017, the Department of Labor sued Oracle for paying white males more than other workers with the same job title and for giving preferential treatment to Asians when recruiting for technical and product development jobs. Similar to Google, both Palantir and Oracle fervently denied these accusations. However, in late April 2017, Palantir agreed to settle without admitting liability for $1.6 million in back pay and other relief. Palantir was also required to hire at least eight employees from the affected class for two different engineering roles.

Should female Google employees bring a lawsuit against the company, the outcomes of recent U.S. Supreme Court cases as well as recent Silicon Valley gender discrimination suits do not provide a favorable forecast. In 2015, Ellen Pao, a junior investing partner at venture capital firm Kleiner Perkins Caufield & Byers, lost her highly publicized $16 million lawsuit which alleged that she was passed over for a promotion due to her gender. In March 2015, Chia Hong, a former Facebook intern, sued for sexual discrimination and harassment on the basis of race and national origin; she dropped the suit a few months later. In 2015, female employees brought class action suits against Twitter and Microsoft for discriminating against female employees; both suits are ongoing.

The U.S. Supreme Court’s decisions regarding employment discrimination have generally been narrowing the path to successfully suing for such discrimination. In the 2011 case, Wal-Mart Stores, Inc. v. Dukes, female employees of Wal-Mart brought a class action lawsuit alleging sex discrimination; the Court ruled against the plaintiffs because there was too much variation between the plaintiffs’ circumstances, which made certification of a class too difficult. Dukes thus had the effect of further increasing the difficulty in certifying a class action, particularly where workers may seek to sue an employer for discriminatory conduct. In 2013, the Supreme Court created a narrower definition of who counted as a “supervisor” in Vance v. Ball, thus further limiting which employees can be held liable for discrimination. Furthermore, in 2013, the Supreme Court raised the bar for the type of conduct that counts as “retaliation” in University of Texas Southwestern Medical Center v. Nassar.

Regardless of whether female Google employees bring a class action lawsuit or individual suits against the company, the Department of Labor’s investigation highlights the need for clarification in the language of the Equal Pay Act. As a federal contractor, Google (and numerous other big companies) are subject to regulations requiring them to turn over information pertaining to their compliance with equal opportunity laws such as the Equal Pay Act to the Department of Labor.

The Equal Pay Act of 1963 prohibits employers from discriminating against employees based on gender by paying employees of a particular gender differently than others of a different gender doing work of “equal skill, effort, and responsibility.” (29 U.S.C.A., Section 206(d)). Anyone who violates the Equal Pay Act in this manner can be subject to a civil penalty of $1100 for each violation. (29 U.S.C.A., Section 216). Furthermore, an employer violating these provisions can be liable to the discriminated employees for a variety of other types of relief such as reinstatement, promotion and payment of unpaid minimum wages and/or overtime. (29 U.S.C.A., Section 216).

Thus, at the crux of the dispute between Google and the Department of Labor is likely how “equal work” is to be defined. The Equal Pay Act prohibits gender discrimination in the form of unequal wages amongst employees doing “equal work.” The Equal Pay Act further defines this as jobs that require equal skill, effort and responsibility, performed under similar working conditions. (29 U.S.C.A., Section 206(d)(1)). Google has publicly acknowledged a dearth of diversity amongst its employees in recent years; in 2014, it released a report showing that seven out of ten employees were male, 3% of the workforce was Latino and 2% African-American. In 2015, the company pledged to spend $150 million over the next year to increase diversity. Its apparent transparency seems at odds with the DOL’s statements, leading to speculation that the Department and Google are disputing what types of job are “equal.”

While the Department of Labor’s ongoing investigations of tech companies highlight the need for clarification of what truly constitutes “equal work” under the Equal Pay Act of 1963, California has taken steps to clarify ambiguities in amendments of its own Fair Pay Act, which went into effect earlier this year. California’s Fair Pay Act was recently expanded to protect against compensation differences between members of one race or ethnicity and those of another: thus women of color being paid less than white women doing the same jobs can now make claims under the Act. Another new amendment to California’s Fair Pay Act specifies that one’s prior salary alone is not sufficient to justify compensation differences between such groups.

Though the results of recent lawsuits brought against big Silicon Valley companies for employment discrimination do not bode well for Google employees who may seek to do the same, the landscape of employment discrimination lawsuits in Calfornia may start to shift as a result of the Fair Pay Act’s amendments. California employees seeking to bring discrimination lawsuits under the Fair Pay Act have now been afforded broader and clearer protections that may make it less difficult for them to prevail in such cases.

Brian S. Kabateck is a consumer rights attorney and founder of Kabateck Brown Kellner LLP in Los Angeles. He represents plaintiffs in personal injury, mass torts litigation, class actions, insurance bad faith, insurance litigation, and commercial contingency litigation. He is a former president of Consumer Attorneys of California.

Natalie S. Pang is an associate at Kabateck Brown Kellner LLP in Los Angeles. Her practice focuses on representing plaintiffs in products liability, personal injury, mass tort and class action cases.

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