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Oracle Attacks DOL Enforcement Power Ahead of Pay Bias Trial (1)

Dec. 5, 2019, 11:21 AMUpdated: Dec. 5, 2019, 11:34 PM

A contentious and long-running pay discrimination dispute between Oracle America Inc. and the Labor Department will be heard by an administrative law judge over the next two weeks, while the technology company pursues separate litigation accusing the agency of unconstitutional enforcement.

The DOL’s Office of Federal Contract Compliance Programs alleges that Oracle owes women and minorities $400 million after paying them less than men and white workers, and placing them in lower-paying jobs. But the Redwood City, Calif.-based company disagrees with the claims, how the agency pursued them, and the tribunal in which they’ll be heard.

Just over a week before the Dec. 5 hearing was set to begin, Oracle sued the agency in federal district court to challenge its administrative trial system as a violation of the U.S. Constitution’s separation of powers. The company argued that discrimination claims should be heard only in federal courts.

Some lawyers say that based on decades of precedent, Oracle has no foundation for a lawsuit against the Labor Department. But if a ruling goes in favor of Oracle, it could upend the agency’s administrative process—which requires an agency judge and appeals board to rule on OFCCP discrimination claims before an employer can bring the dispute to the federal court system.

“The implications are huge. If Oracle were to win this case, and if it were to be sustained on appeal, OFCCP as we know it would cease to exist,” said former Labor Solicitor Patricia Smith, who served during the Obama administration and is now senior counsel at the National Employment Law Project.

DOL intends to “vigorously defend the validity of its equal employment opportunity program,” an agency spokesperson said.

Oracle didn’t respond to requests for comment.

Not a New Question

This isn’t the first time the authority of OFCCP’s enforcement proceedings has been challenged, but a definite answer hasn’t been provided and companies hesitate to raise the question, employer representatives said. The agency enforces a presidential executive order, known as EO 11246, that requires government contractors to comply with workplace nondiscrimination and affirmative action mandates.

Liberty Mutual Insurance Co. disagreed about its status as a “subcontractor” subject to the OFCCP’s regulatory reach decades ago, and questioned whether EO 11246 was an “unlawful delegation of legislative authority” to the executive branch. Although Liberty Mutual Insurance Co. escaped the OFCCP’s grasp on appeal in 1981, the U.S. Court of Appeals for the Fourth Circuit avoided directly answering the constitutional question. Nearly 40 years of OFCCP administrative trial precedent has since followed.

“This is not a new concept,” said David Cohen, co-chair of the Institute for Workplace Equality, a business group specializing in federal contractor compliance. “Just no company has been willing to do it.”

One reason companies haven’t taken a tactic similar to Oracle’s is the potential for a public relations backlash.

“They don’t want to be on record against affirmative action,” said John Fox, a former Reagan-era OFCCP official. Fox is now a management attorney with Fox, Wang & Morgan and defends companies against OFCCP claims. “They don’t want that misconception tarring them.”

The agency is litigating pay bias claims against TIAA and JPMorgan Chase, and recently has settled similar claims with Bank of America, Goldman Sachs, Dell, and Intel.

JPMorgan Chase and Google pushed back against how much information the agency has requested, but not against the constitutionality of the OFCCP’s trial system.

If Oracle were to win the federal district court case, the OFCCP immediately would appeal to the U.S. Court of Appeals for the District of Columbia Circuit, Fox said, and federal contractors with pending matters before administrative law judges would rush to file complaints in the federal district court to stop their cases from being further processed by an ALJ.

Fox said Democrats in Congress also likely would protest, potentially introducing legislation to codify the executive order and an adjudicatory process similar to that of the DOL’s Office of Administrative Law Judges.

‘No Basis for This Lawsuit’

The system Oracle is challenging has decades of precedent and was created with a purpose, according to Lawrence Lorber, the OFCCP’s director under President Gerald Ford, whose administration in 1977 issued the regulations the agency currently enforces.

Oracle argues in its complaint that the OFCCP turned itself into a “super” Equal Employment Opportunity Commission at that time, by “giving itself power that exceeds what Congress granted to the EEOC.” The commission is an independent federal civil rights agency and not a Cabinet-level agency like the Labor Department.

Lorber said he disagrees with Oracle, saying the regulations brought needed “coherence” to enforcement proceedings.

“I candidly see, to be very blunt about it, no basis for this lawsuit,” Lorber said. “If they thought this way, they should have filed this when the case started.”

The National Employment Law Project’s Smith also doubted the timing of Oracle’s lawsuit.

“It seems to me that Oracle’s more than a little nervous that they’re going to lose,” Smith said. “This really is their Hail Mary.”

‘Scorched Earth’ Litigation Style

The OFCCP’s authority hasn’t been challenged in nearly four decades, but it would fit Oracle’s pattern of what Administrative Law Judge Richard M. Clark described as “scorched earth” litigation, lawyers said. Clark has repeatedly admonished both parties for procedural and discovery disputes, as well as accusations against each other throughout the litigation.

“You know if you’re going to tangle with Oracle, you’re going to go to trial,” Fox said, who has worked with Oracle in the past. He said the “usual” cost-benefit analyses when considering what could be protracted litigation “just aren’t there.”

But plaintiffs’ attorney Kelly Dermody of Lieff Cabraser Heimann & Bernstein sees Oracle’s crusade against the Labor Department as “sad, and frankly depressing.”

“If employers don’t want regulations or regulators, they should end pay secrecy, publish everyone’s compensation, and let the employees enforce pay equity based on complete information,” she said in an email.

Although the two cases are inextricably linked, the OFCCP’s administrative lawsuit hasn’t yet been stayed pending an outcome in Oracle’s federal lawsuit. Despite Oracle’s efforts, the compensation bias claims have proceeded, Smith said.

“Every step of the way, they’ve done everything they can, I can’t imagine what they’ve spent fighting this case, and they haven’t been able to stop it,” she said.

The cases are Oracle Am., Inc. v. DOL, Dist. Ct. D.C., No. 1:19-cv-03574 and OFCCP v. Oracle Am., Inc., Dep’t of Labor A.L.J., No. 2017-OFC-00006.

(Adds comment from the Labor Department.)

To contact the reporter on this story: Paige Smith in Washington at psmith@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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