San Jose: Cisco to pay $4.75M for salary discrimination claim

San Jose-based Cisco Systems Inc. will pay $4.75 million to employees after the U.S. Department of Labor found the local tech giant had paid female, black and Hispanic employees less than male and white employees for comparable work.

In an agreement announced Monday, Cisco will soon pay a total of $2 million to 1,505 affected employees in San Jose. The company will also pay at least $2.75 million to employees across the country for “pay-equity adjustments” over the next five years.

Cisco is paying up after a routine audit by the DOL’s Office of Federal Contract Compliance Programs found instances of alleged pay discrimination at the company starting from at least Aug. 1, 2011.

“This agreement ensures that employees from Cisco Systems Inc. are compensated fairly, and will prevent similar issues from happening again at any of its facilities,” said Jane Suhr, regional director for the Office of Federal Contract Compliance Program.

Cisco executives in a statement Monday assured that issues with pay discrimination at the company were limited to its San Jose location between 2011 and 2013, and that those disparities no longer exist.

The Department of Labor’s review of 22 other Cisco locations did not find the same issues, Francine Katsoudas, Cisco executive vice president, said in the statement. She said the corporation believes in “in taking accountability to make things right for our employees.”

“Since 2011, we have changed many of our practices,” she said. “One of the biggest changes we’ve made is to have open and transparent conversations about what’s working and not working. This has allowed us to challenge everything we do and engage our employees in designing a more inclusive and conscious culture for all.”

Those changes include a yearly review of pay equity that results in pay adjustments.

“We transparently communicate to employees why their pay has been adjusted and we’ll continue to do so,” Katsoudas said. “Based on these efforts, we have provided nearly $11.8 million in pay equity adjustments and are committed to investing well over the $2.75 million we have agreed to with the OFCCP over the next five years in the U.S.”

The news comes shortly after a report by New York-based personal finance technology company SmartAsset found that the 21.5 percent of the tech sector workforce made up of women in the San Jose metro area earn, on average, 83 percent of what their male counterparts make.

A Cornell University study last year estimated that it will take a century for women to catch up to men in the computer science sector.

But when it comes to Cisco, the Department of Labor is “satisfied” with the agreement, said Craig Leen, director of the Office of Federal Contract Compliance Programs.

The agency’s early resolution program “helps ensure prompter and broader relief for America’s workforce by allowing contractors facing a potential violation to proactively correct such violations and analyze its pay practices over the next five years to ensure future companywide compliance,” he said.

Contact Janice Bitters at [email protected] or follow @JaniceBitters on Twitter.