The Department of Labor last week sent letters to Microsoft and Wells Fargo questioning whether the companies’ commitments to increase the number of Black employees in their leadership ranks constitute race-based discrimination.
As Corporate America reckoned with its role in the country’s racial injustices following the death of George Floyd in late May, a slew of companies announced hiring and training initiatives to promote and develop Black talent.
Microsoft (MSFT) CEO Satya Nadella in June announced a $150 million diversity and inclusion investment and a plan to double the number of “Black and African American people managers, senior individual contributors and senior leaders” in the United States by 2025, among other initiatives to support Black Americans. Wells Fargo (WFC) CEO Charlie Sharf said in June the bank will double Black leadership in the next five years and will evaluate senior leaders based on their progress in improving diversity and inclusion in their areas of responsibility, in addition to other efforts.
But last week, the Labor Department’s Office of Federal Contract Compliance Programs (OFCCP) Director Craig Leen sent letters to the two companies requesting information on how they plan to implement such commitments “without discriminating on the basis of race.” The OFCCP is tasked with ensuring that companies doing business with the federal government comply with nondiscrimination laws and regulations.
The commitments by Microsoft and Wells Fargo “appear to imply that employment action” is being or may be “taken based on race,” the letters state, per copies obtained by CNN Business from the Labor Department. “Contractors may not discriminate on the basis of race or color for the purpose of providing additional opportunities to individuals of a particular race, and quotas are ‘expressly forbidden.’”
Both companies firmly pushed back on any suggestion that their plans to increase diversity in leadership are discriminatory or illegal.
‘We have every confidence that Microsoft’s diversity initiative complies fully with all US employment laws,” Microsoft General Counsel Dev Stahlkopf said in a blog post Tuesday.
Stahlkopf added: “(We) know full well how to appropriately create opportunities for people without taking away opportunities from others … We hire and promote the most qualified person. And nothing we announced in June changes that. Instead, our continued focus is to work hard to consider and develop the broadest range of qualified candidates for opportunities.”
Wells Fargo spokesperson Peter Gilchrist said the bank is “committed to and taking action to become a more diverse and inclusive company.”
“Numerous efforts are underway to implement changes at all levels of the company, and we are confident that they comply with US employment laws,” Gilchrist said in a statement to CNN Business.
The letters were sent days after President Donald Trump expanded a ban on racial sensitivity training to include some federal contractors. The President had previously barred federal agencies from conducting such trainings, including those on critical race theory and unconscious bias.
The Wells Fargo and Microsoft initiatives represent just part of a broader push by Corporate America this year to address racism and racial inequities, issues that cost the American economy up to $16 trillion over the past two decades, according to a recent Citigroup analysis.
Despite a growing awareness in recent years around the need for more diversity in corporate leadership, the numbers remain dismal — less than 1% of Fortune 500 CEOs are Black and Black professionals in 2018 held just 3.3% of all executive or senior leadership roles. Black employees make up about 4.5% of Microsoft’s total workforce in 2019, and less than 3% of upper management roles, according to its 2019 diversity report. Currently, 6% of Wells Fargo’s senior leadership is Black or African American, the company said in June.
The OFCCP declined to say whether it has sent similar letters to other companies that announced hiring or training initiatives aimed at promoting diversity in recent months.
“OFCCP will send letters to other contractors where it determines a similar inquiry is necessary to confirm that race or sex-based hiring preferences or quotas are not being used,” a Labor Department spokesperson said in a statement to CNN Business.