Amid the recent trend of corporations fighting for social justice and making an effort to hire more Black employees, the federal government is probing companies' diversity initiatives and issuing warnings for the violation of federal laws barring discrimination based on race. According to USA Today, Wells Fargo is the latest to be questioned by the Labor Department.
Reaching an agreement with the Labor Department’s Office of Federal Contract Compliance Programs in August, Wells Fargo paid $7.8 million to resolve hiring discrimination allegations against women and Black employees at the company.
Craig Leen, director of the Office of Federal Contract Compliance Programs, sent a letter to the bank, stating the corporation seems to imply that action is being taken on the basis of race.
In the memo, the department acknowledges affirmative action, which aims to ensure equal opportunity for all applicants. But the letter also highlights another aspect of affirmative action, saying federal contractors must not engage in discriminatory practices in meeting these goals.
"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," Leen wrote.
The bank, which launched its diversity initiative after the killing of George Floyd and Black Lives Matter protests, says it has complied with federal laws.
“Wells Fargo is committed to and taking action to become a more diverse and inclusive company,” the bank said in a statement. “Numerous efforts are underway to implement changes at all levels of the company, and we are confident that they comply with U.S. employment laws.”
Microsoft has also received a warning from the government.
David Lopez, dean of the Rutgers University law school in Newark, New Jersey, said the Labor Department probes represent an unusual use of its resources.
"I don't see why that raises a red flag," Lopez told CBS News.
The Labor Department's inquiry comes after President Donald Trump issued an order last month prohibiting government contractors from conducting diversity training, as Blavity previously reported.
"It looks like the administration is beginning a concerted strategy to tamp down on organizational [diversity, equity and inclusion] efforts," Joelle Emerson, founder and chief executive officer of diversity and inclusion strategy firm Paradigm, told USA Today.
Emerson said the initiatives achieve the exact opposite of the alleged consequences.
"A wealth of research shows that in the absence of clear efforts to advance diversity, the outcome is bias against applicants and employees from underrepresented backgrounds," she said.
A study from USA Today concluded that less than 2% of the top executives at the nation’s largest companies are Black. At Wells Fargo, all of the company's senior leaders are white. The bank has pledged to double its ranks of Black managers and executives in the next five years.
Microsoft, which plans to double the number of Black senior managers by 2025, responded to the inquiry in a blog post.
"We have every confidence that Microsoft’s diversity initiative complies fully with all U.S. employment laws," the company stated. "We look forward to providing the OFCCP with this information and, if necessary, defending our approach."
As Blavity previously reported, the list of companies that have launched social justice initiatives in recent months includes JPMorgan Chase, which announced a $30 billion investment to address the massive wealth gap between Black and white Americans. Other corporations contributing to the effort include Comcast, Bank of America, Walmart, IBM, Pepsi, Apple, Citigroup, Anthem and Capital One.
