US labor department accuses company of rampant exclusion of black and Hispanic people in hiring and higher pay for white men

The US Department of Labor (DoL) has accused the tech firm Oracle of widespread discrimination against women and people of color, including more than $400m in lost wages and rampant exclusion of black and Hispanic people in hiring.

A federal complaint filed on Tuesday said that out of roughly 500 people hired into technical jobs over a four-year period, only five were Hispanic and only six were African American. The DoL has also alleged that more than 5,000 women have been underpaid, with disparities as high as 20%, and that more than 11,000 Asian employees have been underpaid, with gaps as high as 8%.

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The extraordinary claims from US labor officials targeting one of the largest corporations in Silicon Valley build upon evidence civil rights lawyers outlined in a class-action gender discrimination case last week. The DoL’s new complaint is significant because it includes a detailed analysis of both Oracle’s hiring practices and the way women and people of color face “extreme” disparities throughout their careers at the firm.

The case also represents a remarkable challenge to the tech sector, with serious allegations coming from a branch of Trump’s conservative administration, which has generally been hostile on issues of labor rights, racial discrimination and gender equality. The DoL complaint echoes labor investigators’ claims against Google, which has battled high-profile accusations of systemic wage disparities.

Oracle, which is headquartered in Redwood Shores and has more than 70 locations in the US, provides cloud computing services to companies worldwide. The firm has had multiple contracts with the federal government, totaling more than $100m a year. That means like Google, Oracle is subject to federal anti-discrimination laws and DoL pay audits.

Given the scale of the claims and size of the contracts, there’s a lot at stake for Oracle, which has previously denied allegations of discrimination.

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“Once employed, women, Blacks and Asians are systematically underpaid relative to their peers,” the complaint said. “This underpayment is driven by many factors, including Oracle’s reliance on prior salaries in setting starting salaries and its steering of those employees into lower paid jobs.”

California has prohibited employers from asking applicants about prior pay in an effort to reduce wage inequality.

Oracle’s “suppression of pay for its non-White, non-male employees is so extreme that it persists and gets worse over long careers”, the filing said, adding that women and black and Asian workers with years of experience are paid as much as 25% less than their peers.

This means “an increasing pay gap as those employees devote more of their lives to Oracle”, the DoL wrote.

The disparity in pay for women in product development, IT and support jobs from 2013 to 2016 corresponds to losses of at least $165m in total compensation, the complaint said. The DoL’s analysis controlled for employees’ time at the company, experience, job category and other factors.

The fewer than 30 black employees at Oracle have also been underpaid relative to their white counterparts, suffering pay disparities as high as 7.5%, the complaint said.

The DoL first sued Oracle in 2017, just before Trump was inaugurated, and the new complaint this week asks the courts to require Oracle to pay lost wages and correct discriminatory compensation and hiring practices. The labor department said it believes Oracle has not adopted reforms since the first complaint, suggesting the corporation now owes significantly more than the estimated $400m to workers who have suffered pay inequities.

Oracle initially declined to comment to the Guardian, but on Wednesday, Dorian Daley, the executive vice-president and general counsel, released a statement calling the complaint a “meritless lawsuit … based on false allegations and a seriously flawed process within the [DoL] that relies on cherry picked statistics rather than reality”.

Daley’s statement did not include specific objections, but added, “We fiercely disagree with the spurious claims and will continue in the process to prove them false. We are in compliance with our regulatory obligations, committed to equality, and proud of our employees.”

In terms of hiring patterns, the DoL’s analysis found that the company strongly preferred hiring Asian employees – a population the company subsequently underpaid. Of 500 recent college graduates Oracle hired for its headquarters, 90% were Asian, even though less than 65% of graduates with relevant degrees at the schools where it recruited were Asian.

The DoL suggested that Oracle also targets Asian workers due to their dependence on the company for authorization to work in the US, which allows the firm to then suppress their wages. The underpayment of Asian employees equals a total loss of $234m, the suit said.

The practice of prioritizing Asian applicants has also led to the severe exclusion of non-Asians in hiring, according to the complaint, which said that Oracle hired zero Hispanic graduates in 2015 and zero black graduates in 2016.

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The case adds fuel to mounting concerns about discrimination and bias in Silicon Valley, which has faced a reckoning over the last two years surrounding stories of sexual harassment, racism and wage inequality.

Jim Finberg, the civil rights attorney representing Oracle workers in the separate class-action suit, said the DoL’s report supported the analysis in his case, which said women have earned on average $13,000 less per year than men in equivalent jobs.

“Their findings are consistent with our findings, that the payroll data established Oracle paid women less than men, even when they were doing the same work and had the same experience and job tenure and performance review,” he said in an interview. “It’s time for Oracle to do the right thing and stop treating women as second-class citizens.”