REDWOOD CITY — In an explosive lawsuit that threatens lucrative federal contracts, the U.S. Department of Labor has accused Bay Area tech giant Oracle of paying white men more than other workers and favoring Indians for technical jobs.

Oracle “has a systemic practice of paying Caucasian male workers more than their counterparts in the same job title, which led to pay discrimination against female, African American and Asian employees,” the department said Wednesday in a news release.

At the same time, Oracle — which denies the allegations — systematically favored Asians, particularly Indians, in its recruiting and hiring for product development and other technical jobs, “which resulted in hiring discrimination against non-Asian applicants,” the lawsuit said.

The legal action — focused on employment practices at Oracle’s headquarters in Redwood Shores — comes as Bay Area tech companies face increasing pressure to diversify their overwhelmingly white, male workforces. Companies such as Google, Facebook and others have released annual diversity reports, which have shown little progress in hiring women and minorities.

Oracle, which last released a diversity report in 2014, said the Department of Labor is wrong about its hiring practices.

“The complaint is politically motivated, based on false allegations, and wholly without merit,” Oracle spokeswoman Deborah Hellinger said. “Oracle values diversity and inclusion, and is a responsible equal opportunity and affirmative action employer. Our hiring and pay decisions are non-discriminatory and made based on legitimate business factors including experience and merit.”

Oracle has received hundreds of millions of dollars in federal government contracts, according to the lawsuit, which demanded cancellation of all the firm’s current federal contracts, with the company prohibited from obtaining more until it complies with labor rules.

The labor department’s legal action is its largest in recent memory against a Silicon Valley technology company, said department lawyer Janet Herold. She called the Oracle suit “much, much bigger” than those her agency filed against Google — sued in January over the firm’s alleged refusal to produce employment-related records for an audit — and Palantir, sued in September over claimed discrimination against Asians in hiring.

“There are just more people involved, and there’s a compensation component,” Herold said.

Oracle includes limited diversity information in corporate citizenship reports issued every two years. The 2014 report said Oracle had 37 percent minority employees and 29 percent females.

Bigotry might explain part of the Valley’s diversity problem, but money and unconscious bias play more significant roles, said Norman Matloff, a UC Davis computer science professor who studies discrimination in tech.

“You’re hiring in your own image,” Matloff said.

Also, Oracle’s purported emphasis on hiring Indians suggests that like other tech firms Oracle is using the controversial H-1B visa to bring in young foreign workers at lower pay than for American citizens and permanent residents, Matloff contended.

Oracle’s headquarters has more than 7,000 employees out of a U.S. workforce of 45,000, according to the lawsuit.

For product management and other technical jobs, Asians made up 75 percent of applicants, the lawsuit said.

“They’re somehow favoring Asians in the application process,” Herold said. “Their applicant pool is crazy full of Asians.”

The fact that the workers in those jobs are 82 percent Asian shows that Asian people were favored again during hiring, Herold said.

The suit further alleged that Oracle stonewalled labor department investigators by refusing to comply with routine requests for employment data and records that included hiring and compensation data and employees’ discrimination complaints.

Herold described Oracle’s alleged obstruction, similar to what Google is accused of in the department’s January lawsuit, as “relatively uncommon.”

“It seems to be a relatively new strategy, but it really doesn’t make sense,” Herold said. “These are federal contractors. In order to get that contract they agree to provide information and agree to the government’s auditing process.That’s what makes it so crazy. They took the government’s money, and they took the contract, and then they didn’t comply with a very basic requirement.”

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The alleged employment discrimination at Oracle violated an executive order that prohibits federal contractors from engaging in such discrimination, and broke the firm’s contractual obligations to the federal government, the lawsuit claimed.

The suit seeks compensation for those affected, for lost benefits such as wages and promotions.