On July 14, 2017, an administrative law judge issued a 43-page set of recommendations and order (“Order”) on the Office of Federal Contract Compliance Programs’ (“OFCCP”) data requests issued to Google, significantly winnowing much of the OFCCP’s voluminous requests. While the OFCCP may appeal the ALJ’s Order, it represents a significant victory against unreasonably intrusive data requests by the OFCCP, while providing a good roadmap for when and how to push back against such data requests. Importantly, the Order has nothing to do with the merits of the OFCCP's audit, which is ongoing.

Background

The OFCCP is the agency within the Department of Labor charged with auditing government contractors to determine whether they are complying with certain contractually-imposed anti-discrimination and affirmative action obligations. While Google had been a covered federal government contractor at various times between 2007 and 2012, the company's obligation to submit to an OFCCP audit arose on June 2, 2014, when it signed a contract with the General Services Administration for advertising and marketing services (“AIMS contract”).

Google was selected for a random audit of its headquarters' location in September 2015. It cooperated with the OFCCP’s initial data requests and made multiple managers available for interview.1 In June and September 2016, the OFCCP requested significant additional data, focusing largely on compensation issues.2 Google complied with these requests. In total, Google produced 844,450 compensation data points for 21,114 employees on the September 1, 2015, snapshot date.

The OFCCP then requested more data, including (1) a September 1, 2014, snapshot including all the same data points as the September 1, 2015, snapshot; (2) a salary history for each employee over the entire time employed, including back to the company’s founding in 1998 for some long-term employees; and (3) the name, address, telephone number and personal email address of every employee covered by either the 2014 or 2015 snapshot. The parties could not agree on the scope of these three requests, triggering the OFCCP’s enforcement action.

In support of its position, the OFCCP asserted that its requests were relevant because it found indications of pay disparity based on gender at the time of hire, and needed all the historical data to look at the causes of such alleged pay disparity during the review period. Thus, it needed two snapshots to look at pay over time as well as pay history from inception for each employee. OFCCP also added that research shows (1) women do not negotiate as well as men, and (2) if starting salaries are negotiated, female negotiators remain behind better negotiators for their entire careers.3 With respect to contact information, OFCCP asserted it wanted to contact employees to get their views without Google knowing who it contacted. Google countered that the OFCCP did not provide information about the issues it was finding, such that it would evaluate whether the OFCCP’s additional requests were relevant. It also added that the data requests were burdensome and interfered with its business operations.

The Order’s Analysis

The OFCCP’s data requests are akin to an administrative subpoena, and thus must comply with the Fourth Amendment’s prohibition against unreasonable searches and seizures. The OFCCP asserted that Google waived its Fourth Amendment rights by entering into the AIMS contract. The ALJ rejected this sweeping position and instead analyzed whether the requests were so unreasonable and burdensome as to violate the Fourth Amendment.

While finding that the OFCCP was acting within its authority, the ALJ nonetheless found some of the requests violated the Fourth Amendment, stating:

OFCCP should be able to identify specific areas that are relevant to its investigation rather than willy-nilly search anywhere and everywhere for practices that might be causing a disparity in the compensation data. Relevance need not and cannot be established on conjecture or speculation.

Against this backdrop, the ALJ turned to the three requests in dispute.

2014 Snapshot: With respect to the 2014 snapshot, the ALJ found that the OFCCP offered “nothing more” than its “conclusory statement” that the 2015 snapshot showed pay disparities based on gender. In fact, “OFCCP refused any explanation of its analysis,” citing the deliberative process privilege. Nonetheless, the ALJ concluded that the OFCCP met its burden of showing relevance of certain information for the employees that worked at Google during both periods. The relevant information, however, was largely basic compensation information, and not some of the more far-reaching categories the OFCCP was seeking. For example, the ALJ noted that the OFCCP’s investigative authority is limited to discrimination based on national origin, but that does not require the OFCCP to know employees’ places of birth, citizenship or visa status. As such, Google need not provide those data points.4

Employee contact information: With respect to the OFCCP’s request for the personal contact information for more than 25,000 employees, the ALJ stated that “OFCCP’s request for contact information is unreasonable in that it is over-broad, intrusive on employee privacy, unduly burdensome, and insufficiently focused on obtaining the relevant information.” The ALJ discussed concerns with data breaches, specifically citing the 2015 data breaches at the Office of Personnel Management that exposed millions of federal government employees’ data, data breaches during the recent presidential election and ransomware attacks against the Department of Labor. The ALJ went on to point out that Google’s 25,000 employees have no right to opt-in or opt-out of having their personal information provided to the government and may not want to do so. He added that OFCCP failed in any way to consider how providing this information will impact Google’s relationship with its employees.

As a result, the ALJ ordered the disclosure of 5,000 employees’ contact information, a sufficiently large sample to allow the OFCCP to conduct the roughly 100 to 300 interviews that are likely to occur. The ALJ allowed the OFCCP to select the employees. If after interviews the OFCCP needs to conduct additional follow up interviews, it may be entitled to another 3,000 employees’ contact information.

Salary and jobs history: As noted, the OFCCP argued that pay disparities occur at time of hire, and are perpetuated by giving pay increases in proportion to current salaries. To test its theory, the OFCCP claimed it needed the pay history. The ALJ rejected this argument as “legally questionable and factually unsupported at this point,” finding the “OFCCP’s theory is little more than speculation.”

One problem the ALJ found is that there was no evidence Google was ever a covered federal contractor prior to 2007, and as such, the OFCCP’s investigative jurisdiction did not extend back to periods prior to 2007. Thus, the OFCCP lacked the legal authority to investigate for such periods, even if the OFCCP could extend the review period back prior to the generally applicable two-year period of review.

Another problem is the legal sufficiency of the OFCCP’s starting salary theory of discrimination, with the ALJ citing to Rizo v. Yovino, 854 F.3d 1161 (9th Cir. 2017), which held that “prior salary alone can never be a ‘factor other than sex.’” The ALJ then went on to point out that even after two days of interviews with Google’s executives and managers, the OFCCP failed to establish “that Google engages in what most would consider negotiation when it sets starting salaries.” The Order goes on to conclude that “OFCCP’s case is even weaker on starting salaries for Google employees who are promoted.”

The Order concludes with an explanation of the iterative process and what the OFCCP needs to do in order to justify the need for additional information. It also chastised the OFCCP for its failure to accurately understand Google’s pay practices, adding that had it done so the OFCCP “could have made an entirely different showing on relevance.” Lastly, it rejected the OFCCP’s contention that “Google is so large and profitable that no burden is too great” as failing to recognize not merely the financial costs, but interruption to its normal business operations, can be burdensome.

Takeaways

The tenor of the Order made clear that Google had reasonably attempted to comply with the OFCCP’s data requests. For example, the ALJ noted that Google had turned over 740,000 pages of information. In addition, the ALJ recognized the relative benefits versus the burdens of being a government contractor, noting that the AIMS contract at issue had a value of only $600,000, but Google spent nearly $500,000 complying with the OFCCP’s data requests. In addition, the OFCCP’s failure to accurately understand Google’s pay practices, coupled with what was little more than speculative legal theory, led to the decision to find the requests partially burdensome and unreasonable, and as such, narrowed them considerably. But it should also be recognized that while the OFCCP did not get everything it was asking for, it still is receiving substantial amounts of data.

In light of the Order, covered federal government contractors facing data requests that appear overbroad, unreasonable or unduly burdensome should consider:

  • The extent to which the contractor has complied with data requests to date.
  • Its attempts to reasonably narrow the scope of data requests.
  • The OFCCP’s theory of potential liability or basis for making additional data requests.
  • The time periods when a company qualifies as a covered federal contractor to determine if the requests might exceed the scope of the OFCCP’s investigative authority.
  • The ability of the OFCCP to safeguard personnel information and how to balance employees’ privacy rights with the OFCCP’s right to conduct an investigation.
  • The overall burden in complying with the requests, including the amount required to be spent to retrieve and review the data before turning it over to the OFCCP.