Microsoft forks out $3m in back pay settlement to make Feds' hiring discrimination probe go away

Agreement puts a stop to the audit, but isn't an admission of wrongdoing

Updated Microsoft has agreed to fork out $3,000,000 in back pay and interest to resolve an investigation by a US federal agency looking into allegations it unlawfully passed over qualified Asian, African American, and Hispanic applicants who were looking for work.

The deal – a so-called "Early Resolution Conciliation Agreement" inked on 4 September – stops a continuing probe by the federal contract regulator into the tech giant's hiring practices, although Microsoft will have to hand over detailed progress reports into how it is hiring folks over the next few years. The firm denies any discrimination and the settlement does not imply wrongdoing.

You can read the "Early Resolution Conciliation Agreement", which was recently published in the Freedom of Information Act library, with redactions, here* [PDF].

Conciliation Agreements are formal agreements signed by the US Office of Federal Contract Compliance Programs (OFCCP) and the top official of the contractor, in this case Microsoft.

A compliance review by the Department of Labor offshoot earlier alleged that Microsoft, which is a federal contractor, had discriminated against 1,299 qualified Asian, African-American, and Hispanic applicants who applied for the positions of software engineer, solution specialist, developer, and premier field engineers, but were not hired.

The deal, under which $2.55m in backpay and $450k in interest is shared out among all affected applicants – regardless of whether they're still interested in a job at Microsoft – means the OFCCP won't start enforcement proceedings against Redmond or initiate any new audits of the "Covered Facilities". Those facilities include campuses in Las Colinas, Texas, New York City, and Cambridge, Massachusetts – as well as the Microsoft's HQ in Redmond, Washington.

Microsoft was warned that the Feds may review its compliance with the agreement.

Under the deal, Redmond has to contact the affected individuals by first-class mail by November, and fork out to the IRS on the back pay as well as pay banking fees so none of them are out of pocket.

The OFCCP first issued a Notice of Violations on 5 May, 2016, but according to the federal document, a follow-up review of hiring practices in various periods across several MS campuses from December 2012 to November 2018 alleged there was a "statistically significant disparity" against the applicants for certain job group positions.

The deal ends the investigation.

In its most recent Diversity and Inclusion report, for 2019, Microsoft reported "encouraging gains" from June 2018 to June 2019 "in terms of race and ethnicity... in total representation in all categories." It added that: "In the US, we are seeing incremental but slow progress in African American/Black representation at 3.5 per cent and Hispanic/Latinx representation at 5.9 per cent. Combined, this is a representation increase of 24.0 per cent in the last three years and 32.0 per cent in the last five."

We've asked Microsoft for comment. ®

Updated at 16:40 UTC 17/09/20 to add

A Microsoft spokesperson got in touch to say: “The agreement with the Office of Federal Contracting Compliance Programs involves the agency’s hiring concerns in four locations, largely from 2012-2014. The agency recognized that Microsoft had already addressed their concerns and did not require any changes to our hiring practices. When it comes to diversity and inclusion, Microsoft believes there is always the need for improvement and we remain focused on creating environments where every Microsoft employee is able to do their best work.”


*If you're wondering what "(b)(6) & (b)(7)(C)" mean specifically, they're exemption clauses in the US's Freedom of Information Act relating to the protection of personal privacy.

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