The Federal Government’s Harassment of Oracle

January 10, 2020 by Dan Mitchell @ International Liberty

Regulatory policy has been one of the bright spots of the Trump Administration (along with tax policy).

But it’s not a perfect record.

In a column for Townhall, Steve Sherman describes how the Labor Department launched a regulatory attack against Oracle in the final days of the Obama Administration.

President Obama was not a good president, but he was really good at issuing midnight regulations… Obama’s army of left-wing lawyers were also busy writing up last minute lawsuits… President Obama’s administration went after the tech companies Palantir, Google, then Oracle by alleging discrimination using statistics gathered as part of routine audits of these government contractors. In all of these suits, no actual evidence of discrimination was presented, merely statistics gathered that claimed to prove discrimination. This type of evidence would be tossed out in a real court, but with these suits, they were handled administratively and internally at the Department of Labor. …Oracle was so outraged by continued harassment that they fought back and sued the federal government for violating the Constitution’s separation of powers arguing that the lawsuits statutory authority.

So why am I criticizing the Trump Administration for regulatory harassment that was launched under Obama?

For the simple reason that some of Trump’s appointees have allowed the assault to continue, as former Congressman Bob Barr explained for the Daily Caller.

The Trump administration has performed admirably in reducing the regulatory red tape that has strangled American businesses… But for reasons not entirely clear, the Department of Labor has lagged behind other agencies in this regard. One clear example is the way the department’s Office of Federal Contract Compliance Programs (OFCCP) has continued unnecessary and counterproductive Obama-era litigation against tech companies… In a 2017 study, the U.S. Chamber of Commerce…set forth in extensive detail that the OFCCP in recent years had become enamored of faulty, statistics-based challenges to companies engaged in federal contracts… A number of lawsuits reflecting this abusive approach to regulatory enforcement were filed against large tech companies in the waning months of the Obama administration. …the Department of Labor sued…, just two days before President Trump was sworn in, Oracle. …the Labor Department instead has become…a regulatory bully searching for ways to punish companies. …Hopefully, …Donald Trump and Eugene Scalia…will step in and make sure that the small but powerful agency…gets on board the administration’s drive to actually reduce federal regulatory burdens

The Washington Post has some details on the dispute between Oracle and the federal government.

…the Labor Department…alleges Oracle, the database management company founded by billionaire Larry Ellison, paid some women as much as 20 percent less than their male peers, or $37,000, in 2016. The lawsuit was filed by the department’s Office of Federal Contract Compliance Programs, which audits companies with government contracts worth more than $100 million a year. …The hearing in San Francisco has broad significance for the tech industry because the allegations against Oracle are similar to the department’s claims that other tech giants, including Google and Palantir, exercised systemic bias against minority and female employees in hiring, pay or promotion. …Oracle’s lawyer argued that the Labor Department’s expert witness compared employees based on broad job titles and failed to take into account that a software developer who worked on Oracle’s product PeopleSoft is valued differently in the market than developers who work on the artificial intelligence of machine learning. …The department claims Oracle’s college recruiting program hired 500 graduates between 2013 and 2016 for product development roles at its Redwood Shores, Calif., headquarters, 90 percent of whom were Asian. During the same period, Oracle only hired six black people through the recruitment program. …The agency argues that pay disparities stem from Oracle’s practice of…relying on prior salaries to set their pay at Oracle.

The key thing to understand is that the federal government is unable to find any victims of actual discrimination.
As the Wall street Journal opines, bureaucrats are relying on statistical differences.

Protecting the constitutional separation of powers is back in political fashion as more businesses challenge abuses of administrative agencies. One case worth watching is Oracle’s lawsuit arguing that the Labor Department has usurped the federal judiciary and other executive agencies. Labor’s Office of Federal Contract Compliance Programs (OFCCP) filed a discrimination complaint against Oracle in the waning days of the Obama Administration. During a routine audit, the OFCCP in 2014 conducted a statistical analysis of Oracle’s workforce. And what do you know? The agency says it discovered disparities based on race and sex that it claimed were prima facie evidence of discrimination. …In sum, the agency said Oracle discriminated against every class of worker in one way or another. It demanded that Oracle lose current and forgo future federal contracts plus pay up to $400 million in restitution to its alleged victims. Yet its case all but collapsed at an administrative trial this month. The Labor office presented no evidence of intentional discrimination or even witnesses who claimed as much. …Oracle is suing the OFCCP for violating the Administrative Procedure Act and separation of powers. …the agency investigates, prosecutes, tries and punishes businesses even though it has no legislative authority to do so.

I’ll close by citing Thomas Sowell’s column for Jewish World Review on how “disparate impact” is basically a scam.

“Disparate impact” statistics have for decades been used, in many different contexts, to claim that discrimination was the reason why different groups are not equally represented as employees or in desirable positions… The implicit assumption is that such statistics about particular outcomes would normally reflect the percentage of people in the population. But, no matter how plausible this might seem on the surface, it is seldom found in real life… Blacks are far more statistically “over-represented” among basketball stars in the NBA… Hispanics are similarly far more “over-represented” among baseball stars than in the general population. Asian Americans are likewise far more “over-represented” among students at leading engineering schools like M.I.T. and Cal Tech than in the population as a whole. None of this is peculiar to the United States. You can find innumerable examples of such group disparities in countries around the world and throughout recorded history.

Sowell isn’t just theorizing.

He wrote a thoroughly researched book on exactly this issue.

The bottom line is that groups – on average – sometimes have different interests and aptitudes.

Walter Williams observed about ten years ago that, “Not every choice based on race represents racism and if you think so, you risk misidentifying and confusing human behavior.”

And there’s no evidence that Oracle even made decisions based on race to begin with.

So the bureaucrats at the Department of Labor are using bad methodology to harass and extort a company.

Left-leaning administrations have a track record of pushing bad policies on their way out of office, so I’m not surprised the Obama Administration launched the attack on Oracle. But I am surprised that the Trump Administration has allowed the legal assault against the company to continue.

P.S. While I normally don’t think the federal government should have any power to interfere with regards to market outcomes for hiring, pay, promotion, and association, it’s legitimate for Uncle Sam to put conditions on companies that bid on federal contracts. I just wish they would fight actual examples of bias, not mere statistical differences.