Revealed: Google illegally underpaid thousands of workers across dozens of countries

Google has been illegally underpaying thousands of temporary workers in dozens of countries and delayed correcting the pay rates for more than two years as it attempted to cover up the problem, the Guardian can reveal.

Google executives have been aware since at least May 2019 that the company was failing to comply with local laws in the UK, Europe and Asia that mandate temporary workers be paid equal rates to full-time employees performing similar work, internal Google documents and emails reviewed by the Guardian show.

But rather than immediately correct the errors, the company dragged its feet for more than two years, the documents show, citing concern about the increased cost to departments that rely heavily on temporary workers, potential exposure to legal claims, and fear of negative press attention.

Google executives and attorneys at one point pursued a plan to come into compliance slowly and at the least possible cost to itself, despite acknowledging that such a move was not “the correct outcome from a compliance perspective” and could place the staffing companies it contracts with “in a difficult position, legally and ethically”.

Google admitted the failures and said it would conduct an investigation after being contacted by the Guardian.

“While the team hasn’t increased the comparator rate benchmarks for some years, actual pay rates for temporary staff have increased numerous times in that period,” said Spyro Karetsos, Google’s chief compliance officer, in a statement. “Most temporary staff are paid significantly more than the comparator rates.

“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.”

A whistleblower represented by Whistleblower Aid has filed a complaint about the alleged violations with the US Securities and Exchange Commission.

While international labor law is not under the purview of the SEC, the complaint alleges that Google’s failure to disclose the pay parity liabilities, which it estimates could amount to $100m, constitute material misstatements in its quarterly financial reports, a violation of US securities law.

“The disclosure makes it clear that Google hasn’t just broken labor laws around the world, but has misled investors about major legal and financial liabilities,” said John Tye, founder and chief disclosure officer of Whistleblower Aid. “The lawful, anonymous whistleblower disclosure is a critical step toward ensuring that Google is held to account. We urge the SEC to bring an enforcement action against Google, and protect the rights of investors to receive complete and accurate information.”

The issue stems from Google’s extensive reliance on what it calls its “extended workforce”, as well as the plethora of local laws that govern how such workers must be treated in the dozens of countries where Google operates. Google maintains a workforce of more than 100,000 temps, vendors and contractors who are not directly employed by the company, but who perform work on its behalf, on tasks ranging from food service and security to coding and data analysis.

The vast majority of these workers are “vendors” who work on long-term projects that are wholly managed by the vendor company, such as content moderation, and have little interaction with Google employees.

But at any given time, Google also employs thousands of temporary workers. While they are paid by staffing agencies, temps report directly to Google managers. The departments that rely most heavily on temporary workers include recruiting, marketing and Waymo, Google’s autonomous vehicle subsidiary. Globally, Google spends about $800m annually on temporary workers.

The use of contingent workers is common in the tech industry, but Google’s reliance on a “shadow workforce” that outnumbers its direct employee base has long drawn criticism from the company’s own employees, as well as politicians and labor unions.

More than 30 countries, including the UK, the EU member states, India and Taiwan, have enacted “pay parity” or “equal treatment” laws that require temporary workers to be treated equally to full-time employees (FTEs) who perform the same or similar work, according to Google’s internal guidance on the laws. The US, where the majority of Google’s temps are based, does not have any such protections.

In general, these laws require equivalent treatment of temps and FTEs when it comes to pay, hours, breaks, vacation, holidays and certain perks. In the UK, pay parity is required after a 12-week qualifying period, for example, while in Ireland it is mandated from the first day of work. Some countries also mandate equivalency for benefits and bonuses.

The staffing agency and the hirer – in this case, Google – share the responsibility for ensuring equitable treatment, but it is the hirer’s responsibility to provide the agency with accurate data about the pay rates.

In 2012 and 2013, Google undertook an exercise to map all its temporary roles in EMEA (Europe, Middle East and Africa) with the comparable Google full-time roles, according to the internal memo. The exercise produced “comparator” rates that Google then provided to the staffing agencies that recruit and employ its temporary staff. The company performed a similar exercise for temp roles in APAC (Asia Pacific) in 2017.

Since those exercises were carried out, compensation for full-time Google employees has increased substantially. The median total compensation rose more than 38%, from $197,274 to $273,493, between 2017 and 2020, according to SEC filings.

But the comparator rates were never updated. “Ideally this would be done annually,” reads the internal Google memo on the issue, which acknowledges that it is Google’s obligation to keep the information up to date.

By 15 May 2019, the problem was known to Adrienne Crowther, the executive responsible for Google’s extended workforce team (xWS), her comments on the internal memo show.

“Yikes! This seems WAY too old,” she wrote in response to the “2012-2013” date of the comparator data.

“Agreed,” responded Alan Barry, a compliance manager for Google’s extended workforce team. Barry went on to suggest that xWS “refresh” the data as part of a larger project working on ensuring accurate mapping between temporary and full-time positions.

Given the high turnover rate of temporary workers, the number of workers affected by Google’s failure could be in the tens of thousands. One document shows that, as of 16 February 2021, Google had 1,030 temporary workers in countries with pay parity laws, the largest numbers in the UK (343), India (222), Ireland (207) and Germany (59).

That document – an audit of countries with pay parity laws performed for Google by Deloitte – highlighted another problem with the company’s legal compliance. Deloitte reported that pay-parity laws had been enacted in 16 countries where Google was employing more than 350 temporary workers without providing equal treatment rates, including Argentina, Australia, Brazil, Canada, Israel, Switzerland and Taiwan.

Google’s underpayments to its temporary workers are substantial. One internal analysis estimated that Google’s expenses for 1,200 temps in EMEA and APAC regions would need to increase by $17.3m to comply with pay parity laws, of which $12.65m would go to the temporary workers in increased wages and bonuses. (An additional $4.4m in costs would be the result of the estimated 35% markup that staffing agencies charge.)

But that analysis was based on a proposal to correct the rates for new hires only, without providing raises and back pay to existing and previous temp workers for the time they worked at the incorrect rates, suggesting that the total amount of lost wages to current and past workers is significantly higher.

Individual temps were paid between 12% and 50% less than they should have been, according to an internal memo also from February 2021.

Another document showed that temporary workers in Google’s human resources department in the UK were paid between £4.10 and £8.25 less per hour than they should have been, with some temps earning £14.17 instead of £18.27 and others earning £21.56 instead of £29.80.

Google’s delay in addressing the rates could hurt former temporary workers’ ability to seek redress. Under the UK’s Agency Worker Regulations 2010, temps can appeal to an employment tribunal if they believe their rights have been breached, but they must do so within three months. In Ireland, appeals to the rights commissioner are supposed to be made within six months.

“These agency workers have been the victims of wage theft,” said Matthew Creagh, an employment rights policy officer for the Trades Union Council, who criticized the UK’s lack of a state regulator to enforce worker protections. “How will they be compensated? Often the discussion veers towards punishing employers, which is good, but getting the agency workers their money is overlooked.”

Though executives in Google’s xWS department were aware by May 2019 that the company was failing to comply with the law and underpaying workers, the company did not move quickly to correct the rates and provide back wages to those who were owed them.

Instead, it spent at least two years continuing to pay out-of-date rates while it debated internally how to come back into legal compliance without admitting what had happened, documents and emails show.

Leaders of the xWS team appeared keenly aware that admitting the problem would damage its reputation within Google by causing headaches for departments whose budgets would be effected, as well as with the staffing agencies that are liable for providing pay parity. They also expressed interest in preventing existing and former temp workers from knowing they had been underpaid, in order to prevent claims for back pay.

By October 2020, xWS executives, including Crowther and Deepak Negi, another director, and Google’s employment counsels for EMEA and APAC had signed off on a plan to correct the rates, emails and documents show. The company would pursue a “natural correction” of the temp rates, whereby new joiners started at correct rates while existing temps remained at the lower rates, rather than an “immediate correction”, whereby all temps had their rates adjusted to the correct levels.

The plan had received support from executives and attorneys due to “the current low risk of a parity claim, the ability to correct rates and not make a great deal of noise, and the ability to correct rates without immediate substantial financial impact to [Google’s departments],” an xWS operations manager promoting it wrote in an email.

Some xWS staffers appear to have resisted the proposal, noting that it would result in groups of temps performing similar work earning significantly different wages. Some also worried that the staffing agencies, who are responsible for complying with pay parity laws, might ask questions about the changed rates, or even object.

But in an extraordinary December 2020 email, Barry, the attorney responsible for compliance in xWS, endorsed the “natural correction” despite acknowledging that it was insufficient.

“We know that the impacted workers are not on the correct 2020 rates, nor were they in 2019,” he wrote. “So, strictly speaking, from the point that we put ourselves on notice as to the correct comparator rate, it should apply to both the incumbents as well as the new joiners. To do otherwise may place our staffing partners in a difficult position, legally and ethically.”

“In my view, while [an immediate correction] does appear to be the correct outcome from a compliance perspective, I recognise the barriers to this,” Barry wrote. “The cost is significant and it would give rise to a flurry of noise/frustration on the part of the [Google departments] who have not accounted for the changed cost. I’m also not keen to invite the charge that we’ve allowed this situation to persist for so long that the correction required is significant … I am leaning towards favouring [the natural correction] – but with careful thought and consideration needed as to how we communicate it to the [staffing agencies].”

By February 2021, Barry and others were considering a third option beyond the “natural” and “immediate” corrections: applying the new rates to new joiners and existing temps and backdating the increases for the existing temps to their start date. (None of the options included providing back pay to temps who had been underpaid but no longer worked for Google.)

The memo suggests that Barry and the xWS team’s concerns remained primarily reputational. It includes guidance from Google’s employment lawyers that “the threat of litigation is greater than the prospect of actual litigation” since actual litigation would require temps to know that they were being underpaid, and by how much. “If and when they become aware they will seek recompense but will want to avoid litigation. Strategy should therefore be driven by an assessment of the internal PR/reputational risk and the risk of pay disparity becoming known within our temps population.”

Nevertheless, Barry argued that despite the “significant” financial cost and potential for criticism of xWS from Google and staffing agencies, he now believed that this third option was the best course.

“In my view – better to opt to for option three in a controlled fashion now, than in an uncontrolled fashion later,” he wrote.

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