While organizations’ diversity hiring plans may be made with the best of intentions, contingent workforce managers must ensure they accurately follow the letter of the law.
Both Microsoft and Wells Fargo recently pledged to hire more Black executives for senior management positions as part of their diversity initiatives; however, the US Labor Department’s Office of Federal Contract Compliance Programs subsequently sent letters to both firms stating their actions could, in fact, be discriminatory. The agency indicated that statements made by Microsoft CEO Satya Nadella and Wells Fargo President and CEO Charles Scharf could violate federal affirmative action laws, CBS News reported [1].
“The issue here appears to be that Wells Fargo and Microsoft have set quotas (i.e., to double the number of black people), which is illegal, and also used potentially discriminating methods to achieve that,” says Fiona Coombe, SIA’s director of legal and regulatory research. “I think it’s a case of companies needing to take legal advice to craft their diversity goals and plans to achieve them much more carefully, rather than a much wider issue.”
Wells Fargo. For Wells Fargo, the concern stems from a letter [2] Scharf sent to employees in which he wrote, “Wells Fargo is committed to doubling Black leadership over the next five years.” He stated the company will “aggressively recruit senior managers from outside the company, which will in turn better position Wells Fargo to promote from within for its top leadership roles.”
Although federal contractors must establish affirmative action goals, they must not engage in discriminatory practices in meeting said goals, the OFCCP’s letter [3] to Wells Fargo stated. “[Federal] contractors may not discriminate on the basis of race or color for purpose of providing additional opportunities to individuals of a particular race, and quotas are expressly forbidden,” wrote Craig Leen, director of the OFCCP.
Sharf subsequently sent another statement [4] to employees outlining Wells Fargo’s plans to increase diversity. In addition to the new senior leader hires, the banking behemoth recently launched a “returnship” program focused on diverse talent who have been out of the workforce for an extended period; it is also requiring diverse candidate slates for key roles with compensation of more than $100,000 and increasing business with diverse suppliers.
Microsoft. In the case of Microsoft, it stated in a June blog post [5] that it will double the number of Black and African American people managers, senior individual contributors, and senior leaders in the US by 2025. Microsoft also said that senior leadership will be evaluated based upon their progress in improving diverse representation, which “will have a direct impact on year-end compensation decisions.”
Dev Stahlkopf, Microsoft’s corporate VP and general counsel, wrote in a blog post [5] that its OFCCP letter focused on whether Microsoft’s commitment to double the number of Black and African American people managers, senior individual contributors and senior leaders in its workforce by 2025 could constitute unlawful discrimination on the basis of race, which would violate Title VII of the Civil Rights Act.
He stated Microsoft is confident that its diversity initiative complies fully with all US employment laws.
“The OFCCP suggested that this initiative ‘appears to imply that employment action may be taken on the basis of race,’” Stahlkopf wrote. “The letter asked us to prove that the actions we are taking to improve opportunities are not illegal race-based decisions. Emphatically, they are not.”
Reflecting the workforce. Attorney Janette Levey Frisch told SIA that organizations should consider whether their staff reflects the available workforce, which, in addition to Black workers, includes other minorities, individuals with disabilities, women, LGBTQ, etc.
“Do you need to double the number of black managers to balance it with the available workforce?” she said. “If it’s just a statement arbitrarily that ‘we are going to double the number of black managers,’ without any thought to the rest of the workforce, then I can see how that could be problematic in terms of prohibitions against discrimination.”
In addition, citing a specific number might sound like a quota. “Affirmative action is not supposed to be a quota,” Levey Frisch says. “You are supposed to aspire to have your company’s workforce reflect the workforce that is out there and available.”
If you do not hire someone because they don’t fit your diversity hiring criteria and you don’t hire them solely based on the fact that their race, gender or ethnicity etc. doesn’t conform , “that could support allegations of discrimination, and that sounds like you are undermining the very purpose of affirmative action and anti-discrimination provisions,” she says.