A computer technology company’s recent $1.6 million settlement with the Office of Federal Contract Compliance Programs is a stark reminder that federal contractors must ensure their hiring policies do not have any unlawful discriminatory impact on applicants due to their race, ethnicity or gender.

The OFCCP brought a complaint against Palantir Technologies, Inc., alleging the company, a federal contractor, had maintained processes and procedures for hiring and selecting applicants that discriminatorily impacted Asian applicants for several engineering positions.

Palantir’s hiring policies, the complaint said, resulted in a statistically significant applicant/hire ratio of Asian versus non-Asians.  Specifically, for each respective job title, the OFCCP alleged Palantir hired only:

• 1 Asian applicant for 8 spots, where 77 percent of approximately 730 applicants were Asian, exceeding three standard deviations;
• 11 Asian applicants for 25 spots, where 85 percent of approximately 1,160 applicants were Asian, exceeding five standard deviations; and
• 4 Asian applicants for 21 spots, where 73 percent of approximately 130 applicants were Asian, exceeding six standard deviations.

The ratios showed that Palantir’s four-step hiring process and employee referral system was eliminating Asian applicants at an impermissibly greater rate than non-Asians despite their equivalent qualifications, OFCCP alleged.

After attempts at voluntary compliance failed, the OFCCP filed the complaint seeking cancelation of Palantir’s federal government contracts, debarment of the company and its officers, and an order to hire Asian applicants from a list of affected individuals. 

Palantir denied the allegations and submitted competing analytical support to rebut the OFCCP’s statistical calculations. Ultimately, however, it agreed on April 21, 2017, to enter into a consent decree to settle the complaint.  As part of the consent decree and order, Palantir agreed to send class members notices (including releases of claims), extend written job offers to those who responded with interest in employment, hire four qualified class members each into two positions and to pay responsive class members an equal share of a $1,659,434 settlement. 

The takeaway from this case is that federal contractors should be performing statistical impact ratio analyses on at least an annual basis as part of their affirmative action plan obligations to ensure their hiring practices are not having a discriminatory impact on a protected class.

Where a contractor determines that a hiring practice or policy is having a discriminatory impact, it should take affirmative steps to correct it. This may include conducting the impact ratio analysis more than once per year and/or analyzing one’s hiring procedure step-by-step to determine if a particular component of the process is having a discriminatory impact.

Upon identifying the problem area(s), the contractor should make appropriate modifications to the hiring process and re-analyze the data after implementing for several months to see if the results improve. By taking these measures ahead of time, contractors may be able to correct potential costly issues before an OFCCP audit.