Peter Thiel Gets Wakeup Call From U.S. Labor Department Over Racial Discrimination

Silicon Valley billionaire Peter Thiel has been making headlines all year, but not in a way that's necessarily good for business. The latest party to chip in with some bad news is the U.S. Department of Labor. In a lawsuit announced last week, the agency accused Thiel's data-mining company Palantir of racially discriminatory hiring practices.

That's quite a smack in the face for a company that includes a diversity statement on its website:

"... Our community must attract and encourage people of diverse backgrounds, perspectives, and life experiences.

"We work every day to build a truly diverse workforce, and to foster an environment that is respectful and receptive to new ideas. We celebrate difference and diversity — of background, approach, and identity."

Palantir, PayPal and data mining

Palantir is a data-mining company co-founded by Thiel. He also chairs the company's board of directors.

That's not just a status title. BuzzFeed's long-form article about Palantir last July indicates Thiel's position on the board provides him with intimate knowledge of the company:

"Thiel ... knows as much about Palantir as virtually anyone, leading the company's close-knit board. While Palantir has grown in both revenue and employees, its $420 million in cash collections for 2015 amounted to less than a quarter of its customer bookings, raising questions about Palantir's ability to convert those deals into revenue," wrote William Alden of BuzzFeed News.

The company came into being in 2004, according to most sources, though one industry follower traced its official creation to May 2003.

According to that source, Palantir got its start by leveraging the anti-fraud algorithms of PayPal, another company co-founded by Thiel, to work with the CIA and other U.S. government agencies on matters of anti-terrorism and national security.

Perhaps partly due to its government work, Palantir garnered a reputation for secrecy among Silicon Valley watchers.

By 2009, the company expanded its scope in the crime-fighting sector -- counting the Los Angeles and New York City police departments among its clients. Palantir also works with the private sector on anti-fraud and security measures, and the company extended its reach from domestic business to the global market.

Palantir describes itself as a company that "makes products for human-driven analysis of real-world data."

Under the heading "we design technology to help institutions protect liberty," the company further elaborates:

"Analytic technology, especially in the hands of powerful institutions that hold large volumes of data, can pose serious risks to privacy and civil liberties. That's why we build privacy-protective capabilities into our products, help customers understand how to use them responsibly, and work with advocacy groups and the policy community on how technology can be used to protect privacy interests today and in the future."

Department of Labor sues Palantir

That reference to civil liberties is somewhat ironic, considering the Labor Department lawsuit accuses Palantir of deploying "a hiring process and selection procedures that discriminated against Asian applicants for software engineering positions on the basis of their race."

Further undermining the company's diversity statement, the Labor Department's press release indicates the agency is seeking legal relief only as a last resort, "after the department and Palantir were unable to resolve the findings through the conciliation process."

The lawsuit stems from Palantir's government work, which exposed the company to a review by the Labor Department's Office of Federal Contract Compliance Programs.

That office enforces Executive Order 11246 of the Johnson Administration:

"On September 24, 1965, President Lyndon Johnson signed Executive Order 11246, granting supervision of federal contract compliance to the Secretary of Labor, and  creating the department’s first Office of Federal Contract Compliance. The EO ordered federal departments and agencies to impose non–discrimination and affirmative action rules in all federal contracts and federally–assisted construction projects ... "

The lawsuit, filed before the agency's Office of Administrative Law Judges, alleges that from 2010 or earlier to the present time, Palantir's Palo Alto facility used a hiring process for three engineer positions that "discriminate[s] against Asian applicants on the basis of their race."

The lawsuit lists specific instances, including this representative example:

"For the QA Engineer Intern position, from a pool of more than 130 qualified applicants -- approximately 73 percent of whom were Asian -- Palantir hired 17 non-Asian applicants and only four Asian applicants ... The likelihood that this result occurred according to chance is approximately one in a billion."

Thiel, Trump, accountability and Palantir

On the political front, Thiel remains a member of the increasingly exclusive club of staunch Donald Trump supporters, despite the candidate's proclivity for making racist statements and attracting racist supporters.

Thiel was a registered delegate for Trump in the primary season and nailed a prime speaking slot at the Republican National Convention in July. He made no further public appearances and issued no public statements for the rest of the summer, leaving political observers to wonder if he left the Trump fold.

However, it appears Thiel's support for the republican presidential candidate is as strong as ever. In an op-ed that seemed timed to support Trump's appearance at the Sept. 12 "Commander in Chief Forum," Thiel cogitated upon the need for a more forceful approach to labor management in American governance.

He concluded with an observation alluding to the candidate's well-known tagline in his long-running reality show, "The Apprentice:"

“One elementary principle is accountability: We can’t expect the government to get the job done until voters can say both to incompetent transit workers and to the incompetent elites who feel entitled to govern: ‘You’re fired.’”

Speaking of accountability, at the end of its press release the Labor Department dropped a hint that it is also seeking information on other possible labor violations by Palantir. The agency provided its toll-free helpline number (800-397-6251) and Compliance Programs website immediately after noting this area under its charge:

"... contractors and subcontractors are prohibited from discriminating against applicants or employees because they have inquired about, discussed or disclosed their compensation or that of others, subject to certain limitations."

That could be a reaction to widespread reports last spring, regarding a blanket "gag order" Palantir required of current and former employees who accepted an offer of stock compensation.

Stay tuned.

Image: via U.S. Department of Labor.