The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) found pay disparities at Google’s offices in Seattle and Kirkland, Washington, and in Mountain View, California. These disparities affected women software engineers. The OFCCP also found differences in hiring rates that “disadvantaged female and Asian applicants” for engineering roles at Google’s San Francisco, Sunnyvale and Kirkland locations. The OFCCP evaluation researched the period from September 1, 2014, through August 31, 2017.

The OFCCP routinely and randomly conducts audits of federal contractors for compliance with affirmative action and anti-bias laws. They found indicators of bias at five Google locations across Washington and California. As part of the conciliation agreement, the Labor Department will hold off on auditing 39 Google locations for five years, provided Google adheres to the terms of the settlement.

Google has agreed to pay $2.59 million to more than 5,500 current employees and former job applicants. This payment is part of a settlement with the U.S. Department of Labor over allegations of systemic discrimination in compensation and hiring practices. The amount breaks down this way: Google will pay $1.35 million in back pay and interest to 2,565 women software engineers at the company ($527.50 per employee) and $1.25 million in back pay and interest to 1,757 women and 1,219 Asian applicants for software engineering roles they weren’t hired for ($414 per person).

Google will also reserve $250,000 each year for the next five years for any potential pay equity adjustments that may come up. If the pay adjustments for any year come to less than $250,000, Google is to use the difference to support programs around diversity and inclusion efforts, according to the agreement.

Google also will strengthen policies related to compensation and hiring, and amend any discrepancies to ensure nondiscrimination.

Google’s total financial commitment: $3.8 million. This is nothing for Google, whose parent company, Alphabet, has a market cap of $1.28 trillion.

Google has agreed to provide the DOL with annual progress reports on its policies, procedures, proposed actions, training practices and evaluations. Google is to assess its recruitment, screening and interviewing process to comply with Executive Order 11246, which prohibits federal contractors from discriminating in employment decisions “on the basis of race, color, religion, sex, sexual orientation, gender identity or national origin.”

As of September 30, 2020, Alphabet had 132,000 employees. According to a corporate diversity report released in May, Google’s workforce is 68% male worldwide. The company does not provide absolute numbers for its demographic groups but shows that in the U.S. its black workforce increased from 3.3% to 3.7%, and the Latino workforce grew from 5.7% to 5.9% in the year prior to the report’s issue.

James Finberg, an Altshuler Berzon attorney representing thousands of women suing Google for paying them substantially less than men, said Monday’s settlement does not resolve all the claims. “Although there appears to be some overlap between the women in our proposed class and the women covered by this settlement, there are thousands of women in our proposed class not covered by this settlement.” Finberg was also careful to say that the settlement only releases claims made by OFCCP, not claims made by his class members. He said, “This settlement does confirm that my class members have serious claims and are entitled to redress."

Google is known for allowing open internal debate among employees. There has been pushback from workers who said that the company has done little to address complaints of discrimination and harassment. Employees have formed the Alphabet Workers Union, a Communications Workers of America Local 1400 affiliate.

The union spoke against the company’s actions toward Google’s co-head of ethical artificial intelligence, Margaret Mitchell, and referenced the firing of former co-lead Timnit Gebru, saying “Together these are an attack on the people who are trying to make Google’s technology more ethical.”

Google denied any violations. A Google spokesperson said: “We believe everyone should be paid based upon the work they do, not who they are, and invest heavily to make our hiring and compensation processes fair and unbiased. For the past eight years, we have run annual internal pay equity analysis to identify and address any discrepancies. We’re pleased to have resolved this matter related to allegations from the 2014-2017 audits and remain committed to diversity and equity and to supporting our people in a way that allows them to do their best work.”

OFCCP Regional Director Jane Suhr said in a press release, “The U.S. Department of Labor acknowledges Google’s willingness to engage in settlement discussions and reach an early resolution. The technology industry continues to be one of the region’s largest and fastest growing employers. Regardless of how complex or the size of the workforce, we remain committed to enforcing equal opportunity laws to ensure non-discrimination and equity in the workforce.”

Biden has made eliminating race and gender pay gaps a priority. He appointed Jenny Yang head of the OFCCP, and he could enlist her assistance to ramp up anti-discrimination enforcement efforts.

Yang said via email that “Pay discrimination remains a systemic problem. Employers must conduct regular pay equity audits to ensure that their compensation systems promote equal opportunity.”

Other federal contractors that have previously settled Labor Department discrimination claims include Microsoft Corp., Hewlett Packard, Inc., JPMorgan Chase & Co., and Deloitte.