What you need to know
- Google has reportedly been underpaying thousands of its employees for years.
- The company allegedly tried to hide the problem over fears of bad press and increased cost.
- Google could face as much as $100 million in back pay.
Google allegedly underpaid thousands of temporary workers for years and held off on fixing the disparity.
According to a report from The Guardian, Google did not comply with pay parity laws in regions like the UK and Asia, where temporary workers are required to be paid the same rates as permanent employees performing the same work.
The Guardian notes that Google employs thousands of temporary employees globally who are paid by staffing agencies. However, Google apparently failed to update its comparative pay rate benchmarks for similar full-time workers, which meant that the agencies were paying the employees with outdated information.
Company executives allegedly became aware of the problem in 2019. However, there was concern that fixing the discrepancies all at once would call attention to the problem. Therefore the company decided to hold off and instead apply the correct rates for new hires, despite knowing that this was not a sufficient course of action.
A whistleblower who learned of this decision filed a complaint with the US Securities and Exchange Commission (SEC) about the pay discrepancies, suggesting that Google be made held accountable for misrepresenting itself.
John Tye, founder and chief disclosure officer of Whistleblower Aid, says in a statement to The Guardian that Google "hasn't just broken labor laws around the world, but has misled investors about major legal and financial liabilities."
Google's chief compliance officer Spyro Karestos said in a statement that while the company's comparative pay rates haven't increased in years, the pay rates for temp workers have risen over the years.
Nevertheless, it's clear that this process has not been handled consistent with the high standards to which we hold ourselves as a company.We're doing a thorough review, and we're committed to identifying and addressing any pay discrepancies that the team has not already addressed.And we'll be conducting a review of our compliance practices in this area. In short, we're going to figure out what went wrong here, why it happened, and we're going to make it right.
Part of the problem has apparently been that Google apparently employs more temporary staff than it does permanent staff, as noted by The New York Times. Beyond the bad press, executives were concerned that the increased cost associated with immediately adjusting the pay of all its temp employees would negatively impact departments that relied more on them.
Notably, this isn't the first time Google was caught underpaying its employees. Earlier this year, Google was fined nearly $4 million for "allegations of systemic compensation and hiring discrimination" against female software engineers.
That said, The Times notes that Google could end up owing as much as $100 million for more than nine years of back pay for temporary workers in 16 countries. However, it's not yet clear is the SEC will investigate the matter.
