Google to Shell Out $28M to Settle Pay Equity Class Action Lawsuit

A leaked spreadsheet helped secure a $28 million equal pay settlement. Here’s what happened, according to a press release from Gunn Coble LLP, a civil rights law firm in Los Angeles.

Google has agreed to pay $28 million to settle a class action lawsuit claiming that it favored white and Asian employees by paying them more than workers of other ethnicities. A superior court in California granted preliminary approval on March 12. 

Google has denied the allegations, despite reaching the settlement to end the case. 

Lawsuit: Google Used Salary Histories to Set Starting Pay

In 2021, Ana Cantu, who identifies as Mexican and racially Indigenous, left her job at Google after seven years in the company’s people operations and cloud departments. 

She sued the company, claiming it paid diverse new hires less and placed them in lower-level jobs than their White, Asian and Asian-American colleagues in similar roles.

Moreover, the lawsuit alleged the pay disparities occurred, in part, because Google based new hires’ starting pay and level assignment on prior salaries, which reflected historical pay disparities based on race and ethnicity.

In Cantu’s view, Google’s alleged conduct amounted to violations of the California Equal Pay Act. 

She filed the lawsuit on behalf of herself and similarly situated current and former employees.

Leaked Spreadsheet Surfaces

To support her claim, Cantu relied on a 2022 leaked internal Google pay spreadsheet, which showed that diverse employees were paid less than their White, Asian, and Asian-American co-workers for similar work. 

A labor economist later confirmed these findings by analyzing Google’s payroll data, according to Gunn Coble.

“I commend Ms. Cantu who brought this suit against Google, one of the most powerful companies in the world. She risked her career to raise race/ethnicity pay disparity at Google,” Cathy Coble, founding partner of Gunn Coble LLP, said in a statement. “I also want to acknowledge the bravery of both the diverse and ally Googlers who self-reported their pay and leaked that data to the media, enabling us to push for discovery of the data necessary to support this class action. Suspected pay inequity is too easily concealed without this kind of collective action from employees.”

Google Also Agrees to Review Pay Practices

As part of the agreement, Google has committed to work with both a labor economist and an occupational psychologist, who will evaluate the company’s yearly pay equity reviews and its hiring processes related to assigning initial job levels. Their suggestions will be considered to address the claims brought forward in the case.

Takeaways for Finance

Here’s what finance professionals can learn from this eight-figure settlement:

Pay Equity Audits Can Be a Financial Safeguard

The lawsuit highlighted how salary-setting practices can create systemic pay gaps. Regular check-ins on compensation packages across the company is a good best practice, according to Jamila S. Mensah, partner at Norton Rose Fulbright.

Regular pay equity audits, conducted with independent experts, can help companies identify pay disparities before they lead to costly litigation and settlements.

Salary History Practices Can Create Legal and Financial Risk

Google allegedly relied on prior salaries to determine starting pay, which contributed to disparities. Many states, including California, now prohibit using salary history in pay decisions.

Finance teams should work with HR to ensure compensation policies comply with evolving pay equity laws to avoid financial penalties.

Pay Transparency Can Impact Financial Liabilities

A leaked internal pay spreadsheet played a key role in the lawsuit.

As employees push for more pay transparency, companies must be prepared to justify their compensation structures. Proactively managing pay transparency can help mitigate financial risks — before problems escalate into costly legal disputes.

Compliance Often Costs Less Than Litigation

This case provides an example of just how expensive noncompliance can get. The $28 million payout, plus legal fees and reputational damage, shows that prioritizing pay equity from the start is more cost-effective than defending against lawsuits.

To avoid this situation and outcome, finance leaders may rely more on pay equity analysis and compliance tools.