Google Wins Round One in Fair Pay Act Litigation

Broad class action against company rejected

Allen Smith, J.D. By Allen Smith, J.D. December 12, 2017
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Google Wins Round One in Fair Pay Act Litigation

​It's back to the drawing board for employees who brought a class action against Google, alleging that the company had a policy of paying women less than men for substantially similar work. A judge with the Superior Court of California on Dec. 4 rejected plaintiffs' attempt to represent all women employed at Google in California, from hourly employees to executives, which would have been a broad class, noted Megan Winter, an attorney with Fisher Phillips in San Diego. 

"In essence, the court ruled that the initial complaint was not well-pled and is affording the plaintiffs' counsel an opportunity to amend it," said Alissa Horvitz, an attorney with Roffman Horvitz in McLean, Va.

Pled Facts Must Support Allegations

Three former female employees of Google who worked as a software engineer, business systems manager and sales specialist respectively filed suit, alleging that Google had violated California's Equal Pay Act, Unfair Business Practices Act and Fair Employment and Housing Act. The Fair Pay Act, enacted two years ago and effective Jan. 1, 2016, amended the Equal Pay Act, which was again amended effective Jan. 1, 2017, to include race and ethnicity.

[SHRM members-only toolkit: Managing Pay Equity]

James Finberg, the plaintiffs' lawyer and an attorney with Altshuler Berzon in San Francisco, noted that he would file an amended complaint by Jan. 3, 2018. "The only ruling the judge has made was to say that the first complaint was insufficient, but she gave us leave to amend and be more specific and clearer," he said.

The plaintiffs will have to state facts that support their allegations, which the judge found to be too conclusory, Winter said. In the U.S. Supreme Court's 2009 Ashcroft v. Iqbal decision, the high court said that lower courts should reject allegations that are "threadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Mere parroting of legal standards will not be enough to survive judicial scrutiny.

"Because the California Fair Pay Act is a relatively new law, there is scant precedent on the issue of what facts plaintiffs need to allege to bring a claim on behalf of themselves or a class of others," Winter observed. "This may set a standard for future cases and may cause future plaintiffs to narrow the scope of the class that they will seek to represent."

Gina Scigliano, a spokeswoman for Google, said, "We work really hard to create a great workplace for everyone and to give everyone the chance to thrive here. If we ever see individual discrepancies or problems, we work to fix them."

Status of OFCCP Audit

In addition to the plaintiffs' lawsuit, the Office of Federal Contract Compliance Programs (OFCCP) is investigating pay practices at Google. A U.S. Department of Labor administrative law judge on July 14 awarded the OFCCP the right to review some personal contact information of 5,000 Google employees with the possibility of having that expanded to 8,000, Horvitz noted. "OFCCP is seeking the information on all 25,000 employees," she said.

"In connection with this audit alone, we've provided more than 329,000 documents and more than 1.7 million data points, including detailed compensation information, in response to OFCCP's 18 different data requests," said Eileen Naughton, vice president of people operations for Google in a July 17 blog post. "But ultimately we reached an impasse when OFCCP demanded even more employees' compensation and other job information dating back 15 years, as well as extensive personal employee data and contact information for more than 25,000 employees." The company was concerned that the requests went beyond what was relevant to the audit and posed unnecessary risks to employees' privacy.

Self-Audit

In the company's most recent analysis from this year, women received 99.7 cents to each dollar a man received, Ty Sheppard, a Google spokesman, noted. The company annually analyzes jobs to ensure fairness between men and women.

Each year, it suggests an amount for every employee's new compensation, consisting of base salary, bonus and equity, based on role, job level, job location and recent performance ratings. The analysts who calculate the suggested amounts do not have access to employees' gender data. An employee's manager has limited discretion to adjust the suggested amount, providing a legitimate adjustment rationale is cited. The adjustment range also is limited to ensure that the final pay stays within a reasonable range. The pay equity model then is reviewed to ensure employees in the same job categories show no statistically significant difference between men's and women's compensation, according to Google.

Winter said self-auditing is imperative. "My sense is that conducting equal pay audits is on most HR professionals' to-do list but it isn't making it to the top of the to-do list," she said. California's Fair Pay Act has been in effect for nearly two years, which gives plaintiffs' attorneys motivation to file more claims because two years of potential damages have accumulated, she noted.

"Large corporations like Google have been the first to see lawsuits based on the Fair Pay Act, but we are starting to see an uptick in claims against medium-sized and even small businesses," Winter said.

 

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