Google settles pay gap lawsuit

Shareholders and regulators have pressured the company for years over pay gap reporting


Emile Hallez

Google has agreed to pay $118m to settle a five-year-old class-action lawsuit over pay equity, recently filed documents in California Superior Court show.

The settlement, which requires court approval, would apply to about 15,500 women holding 236 job titles in California since Sept. 14, 2013.

The lead plaintiffs in the case are former employees who worked as a software engineer, a manager in various tech leadership positions, a sales associate and a preschool teacher at the company’s Palo Alto child care center.

They alleged that Google systematically paid women less than men who were in comparable positions, in violation of California’s Equal Pay Act.

“As a woman who’s spent her entire career in the tech industry, I’m optimistic that the actions Google has agreed to take as part of this settlement will ensure more equity for women,” plaintiff Holly Pease said in an announcement of the settlement published by attorneys representing the class. “Google, since its founding, has led the tech industry. They also have an opportunity to lead the charge to ensure inclusion and equity for women in tech.”

The settlement also includes requirements that Google’s hiring pay and pay equity practices be analyzed by independent third parties, with that work being supervised by a settlement monitor for three years, according to the announcement.

Although Google has measured its pay equity since 2012 and has publicly reported its findings several times, it has faced pressure from shareholders to do more. Its 2017 report, for example, found no statistical differences in pay by gender and race, although that applied to people working in similar positions.

Arjuna Capital is among those that have pushed the company to provide more detailed information, a campaign that in 2017 resulted in Google committing to annual gender pay gap disclosures, said Julia Cedarholm, senior associate in ESG research and shareholder engagement at Arjuna.

“In Arjuna’s 2022 Racial and Gender Pay Scorecard, they dropped from a ‘C’ to a ‘D’ as they have not disclosed quantitative pay gaps in the last two years,” Cedarholm said in an email. “Instead, the company has opted for qualitative assurance of ‘equal pay,’ while investors continue to push for quantitative data that holds the company accountable to its pay equity goals.”

Arjuna filed a shareholder resolution this year seeking a report on board diversity, which was voted down by a wide margin at the company’s June 1 stockholder meeting. However, no other shareholder resolutions received majority approval in proxy votes.

At the time that the board diversity resolution was filed, 27% of the board’s composition was women, 36% minorities and 18% underrepresented minorities, while the broader US population is made of 51% women, 42% minorities and 32% underrepresented minorities, according to Arjuna’s proposal.

In 2016, the Department of Labor began investigating pay practices at Google, suing the company to get it to provide more information. The company settled with the DOL in February 2021, agreeing to pay a total of $3.8m to 5,000 employees and applicants in California and Washington state.

Google’s parent company Alphabet did not immediately respond to a request for comment.

Data from the firm’s 2022 diversity report, which does not include pay gap information, show that hiring increased for women and minorities in 2021 and declined slightly for men.

Between 2020 and 2021, the percentage of US employees who are women went from just over 32% to 33.5%, according to the firm.

Latest Stories