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Google, Oracle Class Certifications Show Blueprint for Pay Cases

June 4, 2021, 9:16 AM

A California judge’s order allowing a class of 10,000 women to pursue pay discrimination claims against Google Inc. offers a roadmap for other plaintiffs seeking to tackle gender inequity in the workplace, in contrast to other battles against technology giants that failed to gain traction.

The Google case follows a similar ruling last year in a case against Oracle Corp., which also received class action status. The women in that case also survived a motion to dismiss from the tech giant earlier this year. Trials will likely be set for both lawsuits in 2022.

While these suits have moved forward, others have faltered. Workers’ attorneys say that there is still a path to reaching the critical class certification stage, despite a high bar the U.S. Supreme Court set with a 2011 decision that blocked 1.5 million female workers at Walmart Inc. from pursuing their discrimination claims as a group.

“There was an overreaction to that case. Yes, it made it harder to certify employment discrimination class actions, but it’s not at all impossible,” said Pauline Kim, a law professor at Washington University, who studies workplace law.

In both the Google and Oracle cases, the attorneys sued under California’s equal pay laws, and targeted the companies’ use of job seekers’ prior pay to set compensation. This practice has been banned in a handful of states, advocates including the U.S. Equal Employment Opportunity Commission have said that because women are historically paid less than men, using their previous salary bakes in pay gaps.

“Both companies have a practice that has a disparate impact,” said Altshuler Berzon’s Jim Finberg, who represents the workers in the Google and Oracle cases. “If you use prior pay you lock in historical discrimination.”

Federal and states courts are mixed on the issue of prior pay as a defense to equal pay lawsuit claims, and the U.S. Supreme Court has declined to take up a case that would have considered the question.

Google argued in court filings that the class shouldn’t have been certified because the case requires “boundless individualized testimony” for different kinds of work performed by more than 33,000 employees. While attorneys for Google didn’t respond to a request for comment, a company spokesperson provided a statement.

“We strongly believe in the equity of our policies and practices,” the statement said. “The company conducts a rigorous pay equity analysis to make sure salaries and bonuses are fair, and will adjust salaries if needed.”

‘Substantially Similar’

Female engineers at both Twitter Inc. and Microsoft Corp. failed to win class-action status for their gender-bias cases and those rulings were upheld on appeal in 2018 the U.S. Court of Appeals for the Ninth Circuit. Nike Inc. is facing an ongoing class action claim in Oregon federal court over pay and promotion practices, as well.

The Twitter and Microsoft cases were pursued under Title VII of the 1964 Civil Rights Act, and not federal or state Equal Pay Act statutes. Unlike the Google and Oracle cases, they also didn’t allege discriminatory pay based on a common policy of using prior salary history to set compensation.

Finberg said in some ways Equal Pay Act claims, both under federal and state law, are easier to certify than Title VII claims, which have a higher bar to prove discrimination took place. California’s law is more employee friendly, as well, he said, because it compares jobs that are “substantially similar” rather than “substantially equal.”

The substantially similar standard more closely tracks the science of how jobs are organized and compares jobs rather than the person in the jobs, said Kelly Dermody, who represents the Google class.

“That’s not where federal law was headed for awhile,” said Dermody, a partner with Lieff Cabraser Heimann & Bernstein in San Francisco. “Federal law influences the interpretation of state law, and sometimes the opposite is true.”

She said federal courts sometimes consider equal pay claims in too narrow a focus. By contrast, state courts in New York and Massachusetts, along with California, have ruled in favor of workers in equal pay cases.

Meanwhile gender gaps permeate many industries, from Silicon Valley to Wall Street and big-box retailers, Dermody said. Data show that women in the U.S. make 80 cents on the dollar compared to men in similar roles, and the gap is wider for women of color.

“A lot of companies have massive gender pay gaps. They have told themselves a narrative that it’s okay to pay people differently for the same job because they had to hire someone at the higher rate to recruit them.That’s not the law and it’s never been the law,” she said. “Unfortunately those pay decisions that happen at the start of their career create massive pay gaps in a short amount of time.”

‘New Frontier’

The Google certification ruling “opens a new frontier in the employment field” in California, said Travis Gemoets, a partner with Jeffer Mangels Butler & Mitchell LLP, who represents employers. He said it could potentially influence federal equal pay classes, as well.

“You’re gonna see a lot more of this litigation in California,” Gemoets said, adding that the stakes are high with these types of claims because there are a lot of highly compensated individuals.

From the employer perspective, he said that so many pay decisions are highly individualized and they’ve opposed classes that compare apples to oranges.

Many companies are striving to address inequities, however, before they are hit with equal pay lawsuits, Gemoets said.

With exposure “ratcheted up,” employers previously reluctant to take steps to close gender gaps may be more likely to do so to avoid class action lawsuits, he said.

Class Commonality

There is no question there have recently been additions to some state equal pay laws that make them more protective against pay disparities, said Joe Sellers, a Washington, D.C.-based partner at Cohen Milstein Sellers & Toll, who isn’t connected to the Google or Oracle class actions. Sellers represented the plaintiffs in the Walmart Stores, Inc. v. Dukes class action that went to the Supreme Court.

Sellers said the issue of using prior pay has been gaining greater scrutiny, but courts vary and some are more comfortable allowing employers to rely on that practice to set pay rates.

He said when a company has a common system for setting pay, that is a very important feature essential to class certification—and that’s consistent under federal Equal Pay Act claims, as well.

“The key to the certification of the claims was the common system for setting pay rates and data available for making comparisons for workers holding same or similar jobs and accounting for the factors that otherwise explain pay rates apart from gender,” he said.

Class certification is a key step, and the advanced study that the attorneys put forward for Google and Oracle cases show that an individual plaintiff would likely have a hard time putting together those resources for an individual pay claim.

“The failure to get a class certified, for most members of the class, is the end of their claims,” Sellers said. “Class certification itself is not so easy and courts have been raising that burden over the last 15 to 20 years.”

To contact the reporter on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editors responsible for this story: Andrew Harris at aharris@bloomberglaw.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com

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