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Labor Department Questions Microsoft's Pledge to Hire More Black Employees -- 2nd Update

10/06/2020 | 08:48pm EST

By Khadeeja Safdar

Microsoft Corp. was contacted last week by the U.S. Labor Department to see whether its pledge to hire more Black employees constitutes unlawful discrimination.

The software company said the agency overseeing federal contractors is questioning whether its initiative to double the number of Black managers and leaders in its U.S. workforce by 2025 violates Title VII of the Civil Rights Act, which prohibits employment discrimination based on race, color, religion, sex and national origin. .

"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.

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. That compares with about 13% of the U.S. population.

Microsoft made the pledge to improve its diversity ranks in June, as well as a commitment to invest an additional $150 million over five years in diversity and inclusion programs. After the killing of George Floyd in May, it was one of 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 OFCCP is an agency within the Labor Department tasked with protecting workers and promoting diversity at companies like Microsoft 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."

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. Microsoft didn't admit wrongdoing in the agreement.

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.

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.

--Lauren Weber and Eric Morath contributed to this article.

Write to Khadeeja Safdar at khadeeja.safdar@wsj.com

(END) Dow Jones Newswires

10-06-20 2047ET

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