Dive Brief:

• Google has agreed to pay $3.8 million to 5,500 employees and applicants to settle charges of pay discrimination at California and Washington state locations.
• The U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) said it identified the pay disparities during a routine compliance evaluation. The gaps, the agency said, affected female employees in software engineering positions. It also detected hiring rate differences that disadvantaged female and Asian applicants for software engineering positions at several of Google's California and Washington locations.
• In addition to back pay and interest, the company also agreed to set aside $1.25 million in pay-equity adjustments over the next five years for U.S. employees in engineering positions. Google also agreed to enhance future compliance; review its current policies, procedures and practices related to hiring and compensation; and conduct analyses and take corrective action to ensure non-discrimination. Google did not respond to a request for comment by press time.

Dive Insight:

"Pay discrimination remains a systemic problem," Jenny Yang, programs director at OFCCP, said in the statement announcing the settlement. "Employers must conduct regular pay equity audits to ensure that their compensation systems promote equal opportunity."

Pay audits can uncover wage disparities. If a disparity is discovered, employers should determine whether those subject to the difference in pay are performing equal or substantially similar work, Liz Washko, a shareholder at Ogletree, Deakins, Nash, Smoak & Stewart, previously told HR Dive. She explained that the reference to "equal work" applies to the federal Equal Pay Act while the reference to "substantially similar" work is applicable to some state pay equity laws.  

If the work is equal or substantially similar, Washko said, the employer should investigate to find out whether there is a legitimate justification for the pay disparity such as meaningful differences in education, experience, training or performance; if no such justification exists, a remedy could include an adjustment in pay.

Employers should also be aware that many states and localities prohibit employers from asking applicants pay history questions because reliance on prior pay is thought to perpetuate wage disparities for women and minorities.

Google also made the news recently when several hundred of its employees formed a union — a rare move for the tech industry. More than 500 workers at Google's parent company joined the advocacy organization.

"The Alphabet Workers Union will be the structure that ensures Google workers can actively push for real changes at the company, from the kinds of contracts Google accepts to employee classification to wage and compensation issues," according to a statement on the new organization's website.