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U.S. Regulators Accuse Palantir of Bias Against Asians

September 26, 2016

Palantir CEO, Alex Karp in his Palo Alto office.Photograph by Brad Wenner for Fortune

(Reuters) – The U.S. Department of Labor on Monday filed an administrative lawsuit against Palantir Technologies, alleging the data analytics and security company systematically discriminated against Asian job applicants.

Privately held Palantir helps government agencies track down terrorists and uncover financial fraud. It raised $880 million in funding late last year, for a $20 billion valuation, and is considered one of Silicon Valley’s most secretive companies.

The lawsuit alleges Palantir routinely eliminated Asian applicants in the resume screening and telephone interview phases, even when they were as qualified as white applicants.

Palantir denied the allegations in a statement and said it intends to “vigorously defend” against them.

Palantir was co-founded by Peter Thiel and Joe Lonsdale, two of Silicon Valley’s more influential investors and entrepreneurs. Thiel spoke at the Republican National Convention in July and is one of the most prominent tech supporters of Republican candidate Donald Trump.

A representative for Thiel could not immediately comment on the lawsuit.

In one example cited by the Labor Department, Palantir reviewed a pool of more than 130 qualified applicants for the role of engineering intern. About 73% of those who applied were Asian. The lawsuit, which covers Palantir’s conduct between January 2010 and the present, said the company hired 17 non-Asian applicants and four Asians.

“The likelihood that this result occurred according to chance is approximately one in a billion,” said the lawsuit, which was filed with the department’s Office of Administrative Law Judges.

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The majority of Palantir’s hires as engineering interns, as well as two other engineering positions, “came from an employee referral system that disproportionately excluded Asians,” the lawsuit said.

However, Palantir said the Labor Department relied on a “narrow and flawed statistical analysis relating to three job descriptions from 2010 to 2011.”

Since January 2010, Palantir has been a party to federal government contracts worth over $340 million, the lawsuit said.

The Labor Department sent Palantir a notice in October 2015 about its findings, according to the lawsuit. Both before and after that notice, labor regulators attempted to secure Palantir’s voluntary compliance, the lawsuit said, but they did not succeed.

The lawsuit seeks relief for persons affected, including lost wages.

Sept. 26, 2016 (6:25 pm): This story was updated with additional information