Courts Find OFCCP’s Sole Reliance on Statistical Analysis to Prove Pay Disparity Is Flawed

In two recent cases, courts have rejected conclusions of the Office of Federal Contract Compliance Programs (OFCCP) that employers had discriminatorily underpaid its women, Black and Hispanic workers. In the first case, an administrative law judge for the U.S. Department of Labor set forth a ruling on September 22, 2020 that may lead the OFCCP to rethink its statistical analysis approach to workplace wage disparities.

In that matter filed by the OFCCP against Oracle America, Inc. (a federal contractor) during the Obama administration, it was alleged that thousands of female, Black and Asian workers in certain positions at Oracle’s headquarters in Redwood Shores, California, were paid less than their white counterparts dating back to 2013. The OFCCP also contended that Oracle unfairly passed over non-Asian job applicants, particularly those who were of color.

At an administrative hearing held this past December, the OFCCP argued that Oracle’s purported discriminatory tactics ran afoul of affirmative action requirements on federal contractors, barring them from discriminating based on race, color, national origin and other protected categories. Nevertheless, last month ALJ Richard M. Clark issued a 300+-page ruling stating that the OFCCP should dismiss its case against Oracle based, in large part, upon several deficiencies with the way the agency investigated Oracle's compensation data to try to prove that illegal discrimination occurred.

Despite Judge Clark’s recognition that certain disparities upon which the OFCCP’s case was based were of concern, he ultimately determined that the agency failed to show that any illegal discrimination occurred or that there were disparities to be explained by either a pattern or practice of discrimination or a policy or practice of relying on prior pay." Anecdotal accounts offered by Oracle workers did not point to "widespread discrimination . . . bring[ing] the statistics to life," or show a pattern and practice of discriminatory pay disparity. The ALJ determined that simply aggregating or manipulating data is not a substitute for a more focused, and often, individualized look at the reasons behind disparate rates of pay.

In a second case decided last spring against Analogic Corp, the reviewing ALJ found that the OFCCP could not identify a "facially neutral employment policy or practice" that caused purported pay disparity and that Analogic "successfully challenged the methodology and findings of OFCCP's statistical evidence," which indicates that the OFFCP may be overreaching when it relies only on statistical analysis.

Taking these recent decisions to heart, the OFCCP may be moved to change the way it probes pay discrimination (though to what degree may be dependent upon the results of the upcoming presidential election). Arguably, if the agency does not revise its investigative approach, employers may be less inclined to settle cases and more willing to fight OFCCP claims.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.