Microsoft Agrees to Shell Out $3 Million to Resolve Hiring Allegations Raised by OFCCP

October 19, 2020 Government Contractor Compliance

On September 4, 2020, the Office of Federal Contract Compliance Programs (OFCCP) entered into an Early Resolution Conciliation Agreement (ERCA) with Microsoft Corporation, resolving allegations that the contractor engaged in discriminatory practices in its hiring and selection processes at several facilities. In exchange for a five-year moratorium on compliance evaluations for at least 62 facilities, the government contractor agrees to pay $3 million (broken down as $2.5 million in back pay and $450K in interest) to approximately 1,229 affected applicants.

At the time of the ERCA, OFCCP was conducting audits at 10 Microsoft facilities and issued a Notice of Violation (NOV) for Microsoft’s Redmond, Washington facility where the agency alleged that Microsoft discriminated against Black and Hispanic applicants who applied for the software engineering position. The agency further alleged, although no additional NOVs were issued, that the contractor discriminated against Asian applicants who applied for the field engineer position at the contactor’s Las Colinas facility (Irving, TX), who applied for the solution specialist and sales rep/acct exec positions at the New York City facility; and who applied for the Develop II position at the Cambridge facility.

Interestingly enough, the ERCA states that the contractor has already revised its hiring practices that were the impetus for OFCCP’s allegations, but will continue to monitor and maintain records of its hiring practices at its facilities. The contractor agreed to conduct annual pay equity analyses according to an agreed upon (but redacted) pay model. Like most ERCAs, the contractor also agrees to provide periodic reports to OFCCP, including documentation of disbursed settlement payments and the total number of external applicants/hires broken down by race, sex, and ethnicity.

This settlement highlights the importance of federal contractors regularly and systematically conducting analyses of its personnel processes, to include their hiring and selection processes and how they set compensation. Bertram LLP is available to assist federal contractors with assessing their personnel processes and identifying ways to mitigate the risk of allegations of discriminatory hiring practices.

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