DOL Reviewing Large Federal Contractors' Diversity Goals for Executives

October 09, 2020

The U.S. Department of Labor is reviewing whether decisions by Microsoft and Wells Fargo to double the number of Black managers and executives at their companies may be racial discrimination under Title VII of the Civil Rights Act.

In June, Microsoft CEO Satya Nadella publicly committed to doubling the number of Black and African American managers, senior individual contributors, and senior leaders in the United States by 2025 to help address racial injustice and inequity.  Wells Fargo CEO Charlie Scharf likewise committed to doubling Black Leaders by 2025 and said that senior leadership "will be evaluated based upon their progress in improving diverse representation and inclusion in their area of responsibility," which "will have a direct impact on year-end compensation decisions.”

Is the commitment a racial preference or hiring quota?  A letter from DOL's Office of Federal Contract Compliance Programs (OFCCP) suggests the Microsoft commitment “appears to imply that employment action may be taken on the basis of race” and asked the company to prove its actions are not illegal race-based decisions.  The letter gives Microsoft until October 29 to explain how it plans to carry out its pledge.  The Wells Fargo letter is similar.

OFCCP’s review contrasts with the efforts of federal contractors to increase racial diversity and bring more Black and African American employees into leadership positions.

Affirmative action or hiring quotas?  Microsoft said it will “continue to build the pipeline of diverse talent and begin to build it early, through digital skills and STEM education in elementary through secondary schools, and through internships, scholarships and fellowships,” and “further expand recruitment across a broader range of colleges and universities, including, for example, at historically Black colleges and universities.”

Will the Barrett nomination put affirmative action in play?  Supreme Court nominee Amy Coney Barrett's potential confirmation could have major implications for affirmative action in higher education if the high court takes up the high-profile challenge to Harvard University's race-conscious admissions policy that is currently before the First Circuit.