U.S. Accuses Tech Firm Palantir of Bias Against Asian Engineers

By: KATIE BENNER for The New York Times.

SAN FRANCISCO — The United States Department of Labor sued Palantir Technologies, a prominent data analytics start-up, claiming systemic discrimination against Asian job applicants. The move again raises questions about diversity in Silicon Valley.

In its suit, filed on Monday, the Labor Department claimed that Palantir’s hiring processes for software engineering positions placed Asians at a disadvantage. Qualified Asian candidates were routinely eliminated during the résumé screening and telephone interview process, the government said. The company also relied on an employee referral system that favored non-Asian candidates.

Should the suit succeed, the Labor Department has asked for an order canceling all of Palantir’s current and future government contracts, which would include those with the F.B.I. and the United States Army.

“Federal contractors have an obligation to ensure that their hiring practices and policies are free of all forms of discrimination,” said Patricia A. Shiu, who is director of the Labor Department’s Office of Federal Contract Compliance Programs.

In a statement, Palantir denied the allegations and said that it was disappointed with the suit. “The Department of Labor relies on a narrow and flawed statistical analysis relating to three job descriptions from 2010 to 2011,” the company said.

The suit is a reminder of how diversity issues have dogged Silicon Valley tech companies. In a series of disclosures over the last two years, tech companies including Google and Facebook have revealed how their work forces have skewed toward white males. Last March, Facebook was suedand accused of racial and gender discrimination; the suit was later dropped. In July, the Equal Employment Opportunity Commission said in a federal lawsuit that it was investigating accusations of age discrimination by Google.

The government’s suit against Palantir is unusual in that the claim focuses on discrimination exhibited against Asians, who have typically been better represented at many tech companies than African-Americans or Latinos.

The suit — and the proposed penalty — is a blow for Palantir, a company formed in 2004 and funded by well-known investors including Peter Thiel.

Since January 2010, Palantir has been a party to $340 million of federal government contracts, according to the Labor Department’s complaint. Palantir, which is privately valued at $20 billion, is on track to generate more than $1 billion in revenue this year; a large proportion of that sum comes from contracts with the Army, the C.I.A. and the F.B.I.

Palantir’s software has been credited with helping intelligence agencies find and kill Osama bin Laden. While Palantir now also counts state and local governments, financial firms and health care companies as clients, as a United States government contractor, it is subject to executive orders that prohibit hiring discrimination.

“It is rare to see such blatant and obvious discrimination in a federal complaint,” said Peter Romer-Friedman, a lawyer at Outten & Golden, a law firm that specializes in workplace fairness cases. “Not because discrimination isn’t common, but because companies usually make the business decision to go through the conciliation process and settle with the government.”

The government said it had tried to work with Palantir to resolve the claims before the process broke down. Two government divisions unsuccessfully tried to “secure Palantir’s voluntary compliance” with anti-discrimination laws, the suit said.

The government said Palantir’s behavior with Asian candidates included one example where software engineering jobs drew a pool of more than 1,160 qualified applicants. Of that number, 85 percent were Asian. Yet Palantir ultimately hired 11 Asian applicants and 14 non-Asian applicants.

“The likelihood that this result occurred according to chance is approximately one in 3.4 million,” the Labor Department said in its complaint.

After attempts at a settlement failed, the Labor Department filed a formal notice last October asking Palantir to show why the government should not begin enforcement proceedings related to its findings that the company had used discriminatory hiring processes.