Labor Department suit says Oracle paid white workers more and blocked some non-Asian hires

Just two days before President Obama officially turns over the White House to Donald Trump, Obama’s Department of Labor has filed a lawsuit alleging employment discrimination against the tech giant Oracle. The move could cost Oracle millions of dollars in government contracts.

The suit, filed Wednesday by the Labor Department’s Office of Federal Contract Compliance Programs, stems from a two-year investigation that found Oracle “has a systemic practice of paying Caucasian male workers more than their counterparts in the same job title.” Additionally, Oracle allegedly discriminated against non-Asian applicants for “product development and other technical roles.”

The Silicon Valley corporate software vendor, with a stock market value of about $160 billion and a headcount north of 130,000, “had multiple contracts with the federal government totaling millions of dollars a year” during the time of the investigation, according to the Labor Department complaint. Oracle co-CEO Safra Catz serves on President-elect Trump’s transition team and said in a December statement that she supported Trump’s efforts to “reduce regulation.”

“Federal contractors are required to comply with all applicable anti-discrimination laws,” OFCCP Acting Director Thomas M. Dowd said in a press release. “We filed this lawsuit to enforce those requirements.”

The complaint says Oracle “refused” to give investigators information like prior-year compensation data for all employees and whether the company had ever seriously reviewed how it compensates employees. As a result of violating federal pay equity rules for government contractors, the Labor Department is asking for a cancellation of all of Oracle’s federal contracts. Oracle, in turn, is calling the lawsuit a political witch hunt.

“The complaint is politically motivated, based on false allegations, and wholly without merit,” Vice President of Corporate Communication Deborah Hellinger said in a statement. “Oracle values diversity and inclusion, and is a responsible equal opportunity and affirmative action employer.”

This isn’t the first time in recent history that Oracle has gotten in trouble with federal regulators. In December 2015, the company settled an FTC case regarding allegations that it misled consumers about the security of its Java software. Publicly disclosed terms of the settlement did not say whether Oracle paid any financial penalty.

In this current case, regulators may be a bit late to the party in terms of government contracts. While Oracle does indeed get millions per year from the federal government, the company makes several billion dollars in revenue every quarter. And last year, Oracle scaled back efforts to make its software available through long-term, General Services Administration-approved contracts — reportedly deciding that working with the federal government can involve too many headaches.