By Khadeeja Safdar and Ben Eisen
Microsoft Corp. and Wells Fargo & Co. were contacted last
week by the U.S. Labor Department questioning their plans to hire
more Black employees as they seek to diversify their management
ranks.
Microsoft said the agency overseeing federal contractors is
questioning whether its June pledge to double the number of Black
managers and leaders in its U.S. workforce by 2025 violates federal
laws prohibiting discrimination based on race.
"We have every confidence that Microsoft's diversity initiative
complies fully with all U.S. employment laws," Microsoft general
counsel Dev Stahlkopf said in a blog post.
Wells Fargo in June pledged to double Black leaders at the bank
over the next five years. It recently received a letter from the
same agency reminding the bank that it may not discriminate on the
basis of race to provide additional opportunities and that quotas
are prohibited.
A Wells Fargo spokesman said the bank "is committed to and
taking action to become a more diverse and inclusive company.
Numerous efforts are under way to implement changes at all levels
of the company, and we are confident that they comply with U.S.
employment laws."
Black employees represent about 4.5% of Microsoft's U.S.
workforce and less than 3% of senior roles, according to the
company's 2019 diversity report. At Wells Fargo, Black employees
are currently 6% of senior management. That compares with about 13%
of the U.S. population.
After the killing of George Floyd in May and calls for racial
equality, Microsoft and Wells Fargo were among several companies,
from Germany's Adidas AG to Silicon Valley's Facebook Inc., to make
pledges to hire more Black employees.
In a Sept. 29 letter to Microsoft, Craig Leen, director of the
Office of Federal Contract Compliance Programs, said this
initiative "appears to imply that employment action may be taken on
the basis of race." The letter asked Microsoft to prove the actions
it is taking aren't illegal race-based decisions. The letter to
Wells Fargo is also dated Sept. 29.
The OFCCP is an agency within the Labor Department tasked with
protecting workers and promoting diversity at companies like
Microsoft and Wells Fargo that are federal contractors. Companies
have to report their diversity and demographic data to the OFCCP
and they have to have an affirmative-action plan for each
location.
"Although contractors must establish affirmative-action programs
to set workforce utilization goals for minorities and women based
on availability, contractors must not engage in discriminatory
practices in meeting these goals," wrote Mr. Leen, who was
appointed to run the agency in 2018.
Camille Olson, an employment lawyer with Seyfarth Shaw LLP, said
it is common for companies to set diversity goals and that they are
consistent with the OFCCP's affirmative-action obligations for
contractors. "Setting goals is encouraged," she said. "This is
something companies have done for years and years."
Federal contractors are required to address any areas of
potential discrimination in their ranks, said Cyrus Mehri, a
civil-rights lawyer with Mehri & Skalet PLLC. "These companies
are on sound legal footing if they take steps to address a
documented shortfall," he said.
A Labor Department spokeswoman said the agency "appreciates
Microsoft's assurance on its website that it is not engaging in
racial preferences or quotas in seeking to reach its
affirmative-action and outreach goals. OFCCP looks forward to
working with Microsoft to complete its inquiry."
A Labor Department spokesman didn't respond to questions about
the Wells Fargo letter or how many companies received similar
notices.
In September, Microsoft agreed to pay $3 million to settle OFCCP
allegations of discrimination in hiring at four facilities. OFCCP
said audits found hiring disparities against Asian, Black and
Hispanic job applicants. In August, Wells Fargo agreed to pay $7.8
million to settle OFCCP allegations of hiring discrimination
against Black job applicants. Neither company admitted wrongdoing
in the agreements.
A Microsoft spokesman said the agreement largely involved hiring
concerns from 2012 to 2014. "The agency recognized that Microsoft
had already addressed their concerns and did not require any
changes to our hiring practices," he said.
A Wells Fargo spokesman said the agreement related to a review
of hiring data from six to 10 years ago. "There were no findings
that Wells Fargo hiring managers intentionally discriminated
against job candidates," he said.
Last month, the Trump administration issued an executive order
that prohibits companies with federal contracts from participating
in training that "promotes race- or sex-stereotyping or
scapegoating." The OFCCP has created a hotline for workers to
report their companies for potentially violating the order.
In June, Microsoft also said it would step up efforts to fight
racial disparities outside the company, including setting up a $50
million investment fund focused on supporting Black-owned small
businesses. The company pledged to use data and technology to
identify racial disparities in the criminal-justice system and
improve policing.
"We believe it is a core part of our mission to make our
company, our community and our country a place where people of
diverse views and backgrounds are welcomed and can thrive,"
Microsoft said in its blog post.
Wells Fargo has added two senior Black leaders to its operating
committee, is requiring a diverse slate of candidates for roles
paying more than $100,000 and is changing its compensation system
to hold senior managers accountable for hitting diverse hiring and
promotion goals
--Lauren Weber and Eric Morath contributed to this article.
Write to Khadeeja Safdar at khadeeja.safdar@wsj.com and Ben
Eisen at ben.eisen@wsj.com
(END) Dow Jones Newswires
October 06, 2020 21:53 ET (01:53 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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