Jessica Guynn

USA TODAY

SAN FRANCISCO — The Labor Department is suing prominent Silicon Valley data company Palantir Technologies to end what it alleges is a pattern of discrimination against Asian job applicants.

The lawsuit filed Monday with the Labor Department's Office of Administrative Law Judges is also seeking compensation including lost wages for Asian job applicants, the department said.

Palantir said it "firmly" denied the allegations in the lawsuit.



"We intend to vigorously defend against these allegations," the Silicon Valley company said in an emailed statement.

Palantir is a notoriously secretive data-analytics company valued by private investors at about $20 billion, making it one of technology's biggest "unicorns." Its software compiles data from disparate sources and then scours that data for patterns and connections for the federal government and companies in the private sector.

As a federal government contractor that provides software and data analysis to the FBI, the U.S. Special Operations Command and the Army, it is barred from discriminating based on race, color, religion, sex, sexual orientation, gender identity, national origin, disability or against military veterans.

The Labor Department said it filed the administrative lawsuit after being unable to resolve the case with Palantir. At risk are Palantir's existing government contracts. It could also be barred from future federal contracts.

"Federal contractors have an obligation to ensure that their hiring practices and policies are free of all forms of discrimination," Patricia Shiu, director of the Labor Department's Office of Federal Contract Compliance Programs (OFCCP), said in a statement. "Our nation’s taxpayers deserve to know that companies employed with public funds are providing equal opportunity for job seekers."

The lawsuit stems from a compliance review by the OFCCP that found that starting in January 2010, Palantir's hiring practices routinely discriminated against Asian applicants for software engineering jobs. Asian applicants were routinely eliminated in the resume screening and telephone interview phases of hiring despite being as qualified as white applicants, the Labor Department alleges.

In one example cited by the lawsuit, Palantir reviewed more than 130 qualified applicants for an engineering intern position, 73% of whom were Asian. The company hired 17 non-Asian applicants and four Asians.

"The likelihood that this result occurred according to chance is approximately one in a billion," the lawsuit alleged.

Palantir attacked the Labor Department's methodology. "Despite repeated efforts to highlight the results of our hiring practices, the Department of Labor relies on a narrow and flawed statistical analysis relating to three job descriptions from 2010 to 2011," the Silicon Valley company said in a statement.

The lawsuit, which also charges Palantir with having an employee referral system that discriminated against Asians, comes amid growing attention to the diversity of the work force at Silicon Valley technology companies. Most of the focus has been on the lack of women, Latinos and African Americans.

Tech companies had more white employees (69%) than the average hired by all firms (64%) and more Asian-Americans (14% vs. 5.8%), according to a recent report from the Equal Employment Opportunity Commission that was based on 2014 data filed with the EEOC. When it comes to executive high tech jobs, whites held 83%, while Asian-Americans held 10.5%, the report found.

Facebook and Twitter have both been sued for discrimination by Asian-American women. Both companies deny the charges. Former Reddit chief executive Ellen Pao lost a high-profile discrimination case last year against venture capital firm Kleiner Perkins Caufield & Byers. In her most recent effort, Project Include, she has joined with other advocates to put the spotlight on the lack of diversity in Silicon Valley.

"At Ascend we have witnessed this first hand and we believe it is a broader issue," said Jeff Chin, president of Ascend Foundation, a nonprofit for Asian business professionals.

Last year Ascend published "Hidden in Plain Sight" that analyzed 2013 employment data filed with the Equal Employment Opportunity Commission by five major Silicon Valley tech companies: Google, Hewlett-Packard, Intel, LinkedIn and Yahoo. The report found that Asian Americans were well represented in the Silicon Valley tech industry but not at the executive levels.

Ascend found that race "is 3.7 times more significant than gender as a negative factor in advancement at the technology companies we looked at," Chin said.

Cliff Palefsky, who represents employees in employment cases, said he was pleased the Labor Department is taking on discrimination in the Silicon Valley hiring process.

"Those kinds of cases are difficult to bring on an individual basis so it's very helpful to see the department focus on systemic issues," Palefsky said. "Hopefully the case will be successful and that the mere fact of them bringing it will have a deterrent effect on others."