By Gary Peeples
The Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) recently filed an administrative complaint against Google, Inc. (“Google”). That complaint, which is covered in detail below, was triggered by Google’s alleged refusal to provide granular employee compensation data to the OFCCP during the course of a compliance audit.
Google, like many Silicon Valley companies, has struggled to recruit and retain women and minority employees in the percentages in which those groups are represented in the United States’ overall labor force. According to recent Census data, women comprise approximately 47% of the national workforce and African-American persons comprise roughly 11%. Women comprise approximately 30% of Google’s global workforce and African-American persons comprise only 2% of the company’s United States-based workforce American (global totals for Google broken down by race are not publicly available).
Although Silicon Valley’s employee culture has been criticized as male-centric, Google cannot be blamed for all of the underlying causes. One example is that, according to recent Census data, only 14% of engineers in the United States are women. Federal contractors and subcontractors (Google is one of them), however, are subject to Executive Order 11246. That executive order requires covered employers to, among other things, take certain affirmative actions to ensure that equal opportunity is provided to all employees and permit the OFCCP to inspect and copy any and all records pertaining to equal employment opportunity and affirmative action plans. Executive Order 11246 and its concomitant data retention and production requirements have led to the current dispute between Google and the OFCCP.
A. Factual Background
Google is one of the world’s most valuable corporations; its market capitalization as of January 8, 2017 is over $565 billion dollars. The company’s search engine has over 2.2 billion users worldwide. By contrast, Google’s contracts with the federal government are small potatoes. As relevant here, the federal government in June 2014 awarded a $600,000 advertising/marketing-related contract to Google. That contract, although insignificant when compared to Google’s other operations, carried with it all of the obligations imposed by Executive Order 11246.
Subsequently, in September 2015, the OFCCP selected Google for a compliance audit. The OFCCP has conducted more aggressive audits in recent years, and this audit appears to be no exception. Over the course of the audit, the OFCCP’s investigators requested a significant amount of detailed compensation data from Google, including: (1) a compensation snapshot as of September 1, 2014; (2) job history and salary history for employees contained within a September 1, 2015 compensation snapshot, which included starting salary, starting position, starting “compa-ratio” (a measure of an individual employee’s compensation against an industry average), starting job code, starting job family, starting job level, starting organization, along with any changes to any of the foregoing; and (3) the names and contact information for all employees contained within the September 1, 2014 and September 1, 2015 compensation snapshots. All of this information, according to the OFCCP, is crucial in determining whether Google has fulfilled its equal pay obligations under federal law.
B. Complaint Against Google
The OFCCP alleges that Google denied the agency access to the above-described compensation information. In particular, on June 17, 2016, Google notified the OFCCP that it would not produce the information sought by the agency because the requests were overly broad and because the requests implicated confidential information. Google also says that it has already produced “hundreds of thousands of records” during the course of the audit (the audit has now lasted almost a year-and-a-half).
The OFCCP then engaged in various informal efforts to secure the employee compensation information that it had demanded. Those efforts proved unsuccessful, and the OFCCP in September 2016 issued a Notice to Show Cause. That notice was a signal to Google that, if it did not comply within 30 days, the OFCCP would turn to formal enforcement proceedings. Google did not comply within the pertinent time period.
Next, the Department of Labor’s Office of the Solicitor (the enforcement arm of the OFCCP) on December 29, 2016 filed an administrative complaint against Google. That complaint asks an administrative law judge to order Google to (1) begin complying with all of the terms of Executive Order 11246; (2) produce all of the above-referenced compensation data to the OFCCP; and (3) permit the OFCCP to complete its compliance audit. Google has not yet formally responded to the administrative complaint.
It is difficult to imagine that Google will resist the OFCCP’s demands indefinitely. For one thing, now that the dispute is before an administrative law judge, there will eventually be a formal hearing, and the administrative law judge will then issue his or her recommended decision. Either side may appeal that decision to the Administrative Review Board. And Google has the right to appeal the Administrative Review Board’s decision to a federal court.
But it is unlikely that the case will get that far. Other corporations (for example, Bank of America) have mounted challenges to the OFCCP’s audit authority in the past, and those challenges were generally unsuccessful. The federal government, moreover, holds a trump card: debarment. Debarment—which is a remedy that is available only after a hearing—means that an employer is ineligible to receive any future federal contracts. Again, although Google’s federal contracts make up but a small part of its revenue, Google likely does not want to incur any further negative publicity with respect to its (1) hiring and retention practices or (2) its compensation practices. Google may dominate the search engine market, but the federal government is uniquely positioned to take on Google in administrative proceedings and, if necessary, in federal court.