A Thiel Security Data Startup is Sued by Feds for Anti-Asian Discrimination

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September 28, 2016; NBC News

Based on a review by its Office of Federal Contract Compliance Programs, the Department of Labor on Monday filed an administrative lawsuit accusing Palantir Technologies of years of systemic discrimination against Asian job applicants. The company, currently valued at $20 billion, is one of Silicon Valley’s most profitable companies and, because of the nature of their security data analysis work, one of its most tight-lipped. Its dealings are so secretive that the lawsuit only hit the news this week even though the Department advised the company of its findings nearly a year ago. Palantir was given the opportunity to comply voluntarily, but Palantir and the Office of Federal Contract Compliance could not reach agreement and the company will face consequences.

The Office of Federal Contract Compliance derives its authority primarily from Executive Order 11246. The order prevents federal contractors who receive over $10,000 in federal money per year from discriminating against protected classes. Palantir has received more than $340 million since 2010.

The filing specifically cites Palantir’s use of discriminatory hiring processes and selection procedures to eliminate Asian applicants who were as qualified as white applicants in its resume and telephone screenings, maintaining a discriminatory employee referral system, and failure to provide equal employment opportunity. The remedy for the potential employees includes lost wages. This is a setback for the Silicon Valley powerhouse since the Office of Federal Contracts Compliance has the teeth necessary to cancel the company’s federal contracts and remove it from consideration for future contracts.

Palantir Technology was founded in 2004 as a private software company in the forefront of data mining and analysis. It is one of an increasing pool of Silicon Valley tech companies not interested in going public. This strategy is lucrative for investors, but is also a consideration given the stealth nature of most of its work. In recent years, it has grown to include healthcare, financial concerns, and state and local public agencies, but the company’s initial clients were federal government agencies involved in national and international intelligence gathering. Palantir is the go-to forensic data tracker for discovering financial fraud, and it’s widely believed that their software was responsible for finding Osama bin Laden.

Although there are a variety of investors, the company was founded by two high-tech startup luminaries, Peter Thiel and Joe Lonsdale. Thiel, PayPal founder and Facebook investor, is the largest shareholder. Thiel is also the company’s public face—and it’s a face with an increasingly high profile. Thiel has admitted to bankrolling Hulk Hogan’s successful $140 million defamation lawsuit against Gawker Media, resulting in its filing for bankruptcy, in what’s believed to have been an action of revenge for Gawker publisher Nick Denton’s outing of Thiel as gay in 2007. He supports Donald Trump and was a delegate to the Republican National Convention, where he was a speaker.

According to the civil rights counsel for the Office of Federal Contracts Compliance, Ian Eliasoph, Palantir was “randomly selected for a review.” Their data analysis process reviews and compares the number of position applicants with applicants’ demographics. If signs of discrimination are found, the office opens an inquiry to search for violations. According to the Government Accountability Office, the compliance office’s five-year review conducted 20,918 compliance evaluations, with 78 percent at no violations, 22 percent with some violation, and two percent with discrimination findings. The Department of Labor, using its own data analysis, found that in one instance, in a pool of 730 qualified applicants where 77 percent were Asian, Palantir hired one Asian and six non-Asians. According to the Department of Labor, the statistical likelihood of that result is one in 741.

Thiel was unavailable for comment. The company’s statement expressed disappointment that the Department of Labor is going forward with the suit, denies the allegations, and plans to “vigorously defend” against them, stating the department used a “narrow and flawed statistical analysis relating to three job descriptions from 2010 to 2011.” The Department responds that its evidence shows they have not changed their practices. High numbers of Asians continue to apply, and their applications continue to be rejected.

Members of the Asian community are frustrated but clear on the issues. Tracy Chou, of Pinterest and one of the founders of Project Include, an organization to increase the number of women of color in Silicon Valley executive positions, said, “Asians are not perceived to be the same as whites even though in these diversity conversations Asians get lumped together with whites because they’re over represented in tech compared to the overall population.”

Asians are concentrated in high tech, but not in executive or management pipeline positions. The national Pan-Asian community established Ascend to research Asian employment data, provide leadership skills, and prepare students for management careers, essentially creating the pipeline. Its research shows that in 2015, Asians represented 27.2 percent of the professional workforce at Google, Hewlett-Packard, Intel, LinkedIn, and Yahoo, but were 13.9 percent of the companies’ executive workforce.

The mission of Ascend, with its seventeen professional chapters and thirty-four student chapters, is to prepare high potential Asian managers for leadership positions in leading companies. But will Alphabet, Hewlett-Packard, and Facebook be willing to hire these skilled executives when their collective track record for hiring executives other than white males and a few token women is so poor? They have all agreed to release yearly hiring statistics. Hiring people is better than paying people off, as Hewlett-Packard learned two weeks ago when the Department of Labor’s Office of Federal Contract Compliance Programs forced them to pay 349 African Americans, one American Indian/Alaskan Native, 109 Asians, 44 Hispanics, and one Native Hawaiian/Pacific Islander $750,000 in back wages to settle allegations of its hiring discrimination.—Mary Frances Mitchner