Update: Dec. 7, 2020: The U.S. Department of Labor will not appeal the administrative law judge's decision, the agency announced Dec. 3. "The Solicitor of Labor and I have decided not to pursue the case further because we believe the likelihood of prevailing on appeal is low and because OFCCP no longer evaluates compensation in the manner rejected by the ALJ in this case," said Craig Leen, director of the agency's Office of Federal Contract Compliance Programs. "Instead, OFCCP will learn from the decision in an effort to continue improving the efficacy of its critically important compensation program."

Dive Brief:

• Oracle did not engage in intentional compensation discrimination, a U.S. Department of Labor administrative law judge ruled Sept. 22, potentially ending a lawsuit first filed in 2017. The U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) had sued Oracle, alleging the federal contractor engaged in discriminatory pay practices that cost black, Asian and female employees $400 million in lost wages over a roughly four-year period. Specifically, it based employee's initial pay rates on prior salary and put affected employees on less lucrative career paths, OFCCP alleged.
• The ALJ said that, among other things, "Oracle is budget conscience and seeks to make money, but there is no evidence that this is driven by discriminatory intent or that Oracle intentionally discriminates in order to save money." Additionally, "there is no plausible mechanism for systemic discrimination by the alleged wrongdoers. Lower-level managers are the primary decision makers in compensation outcomes and the potential mechanisms of discrimination that are available to Oracle's higher-level executives and HR personnel (budgeting, instructions, approvals) are not likely means for the sort of discrimination alleged." OFCCP can appeal the decision.
• Oracle said in a statement that it is "grateful" for the ruling. "We have been subject to years of harassment by Department of Labor employees with no evidence of discrimination whatsoever," said Dorian Daley, Oracle's general counsel. "This case never should have been brought in the first place."

Dive Insight:

Pay gaps based on race and gender have received increased attention in recent years, with several employers making public promises to reduce or eliminate disparities. For example, to correct pay disparities discovered during a 2015 equal pay assessment, Salesforce paid two installments of $3 million. Adobe announced in 2017 that it had reached pay equity along gender and race lines.

Pay assessments can be an important tool for employers that want to achieve pay equity, experts have said. Attorneys have advised employers to — after careful planning — review pay practices, assess pay differences to devise a plan to address any issues uncovered.

OFCCP's allegation that Oracle engaged in discrimination by relying on candidate's salary history speaks to another recent trend. Many states and cities have salary history bans in place to combat pay gaps, often preventing employers from asking about an applicant's previous pay.

The impact of such bans, however, remains unknown. Researchers at the Boston University School of Law recently discovered that, with salary history bans in place, employers posted wages more often and increased pay for job changers by about 5% more than comparable job changers. The analysis found pay increases were even larger for job-changing women and African Americans at 8% and 13%, respectively. But a study from the University of Chicago, the London School of Economics and Burning Glass Technologies found that while online job posting increased and was more likely to include salary information, new hire pay declined.