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Oracle Case Highlights Double Whammy Facing Tech Contractors

Jan. 23, 2019, 9:15 PM

Federal contractors that employ large numbers of foreign workers might be opening themselves up to a double whammy of Labor Department discrimination claims.

Tech conglomerate Oracle America finds itself in just such a scenario. It was hit with allegations it underpaid women and minority workers and showed a preference for hiring certain visa-holders. Those allegations came in ongoing litigation with the DOL’s Office of Federal Contract Compliance Programs, a relatively obscure agency that conducts discrimination audits of government contractors. Cisco Systems Inc. reportedly faces similar claims, and more tech companies could be on the radar.

“OFCCP seems to have a ‘working theory’ that employers in the tech industry use cheaper, foreign labor to help keep down wages and that translates into race and national origin discrimination,” Jackson Lewis principal Matthew Camardella told Bloomberg Law. “The clearest example of this comes out of the Oracle complaint.”

In the Oracle lawsuit, the agency says the company’s “highly discriminatory college and university hiring practices” showed a preference for recent, “visa-holding Asian” graduates. It also says the workers’ dependence on the employer for work authorization “lends itself to suppression of that workforce’s wages.”

Of the approximately 500 new graduates Oracle hired from 2013 to 2016, approximately 450 were Asian, while 11 were Black or Hispanic, according to the lateast filing. Asian workers were later underpaid in comparison to white employees, the agency said.

Oracle has denied the accusations.

“This meritless lawsuit is based on false allegations and a seriously flawed process within the OFCCP that relies on cherry picked statistics rather than reality,” Oracle Executive Vice President and General Counsel Dorian Daley said in a Jan. 23 statement to Bloomberg Law. “We fiercely disagree with the spurious claims and will continue in the process to prove them false. We are in compliance with our regulatory obligations, committed to equality, and proud of our employees.”

Multiple management attorneys confirmed that the agency has asked about workers’ citizenship status over the course of regularly scheduled audits, particularly within the tech industry.

The agency is currently engaged in ongoing litigation with other technology companies like Google over separate non-compliance issues, and has settled allegations of discrimination with Qualcomm and Dell EMC.

A Department of Labor spokesman told Bloomberg Law that discrimination under national origin is unlawful, but did not specifically respond to claims of scrutiny of work authorization.

Red Flags

The agency usually starts asking questions about worker citizenship status when pay discrimination is found in an audit, Camardella said.

Companies are legally required to pay H-1B visa holders “at least the prevailing wage or the employer’s actual wage, whichever is higher, and pay for non-productive time,” according to a labor condition application each employer must file when applying for worker visas. Technology companies heavily utilize the H-1B program, which allows skilled employees to work in the U.S.

Recent college graduates might also be hired through Optional Practical Training, a program that is looser with wage requirements, Howard University professor Ronil Hira told Bloomberg Law. Hira has written widely on the topic of workforce immigration, focusing on industries requiring high levels of skill.

“This highlights how the government rules provide a financial windfall for employers to prefer cheaper foreign guestworkers over US workers,” he said in an email. “It rigs the labor market in favor of hiring a guestworker over a US worker even though the Obama administration claimed in its OPT regulations that it prevents employers from doing so.”

The OFCCP also asks more questions in an audit if a company holds many work visas, Ogletree Deakins partner Leigh Nason told Bloomberg Law.

“It appears that employers are particularly subject to this type of allegation if they employ large numbers of visa holders, especially those from Asia or India,” she said.

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; Terence Hyland at thyland@bloomberglaw.com