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Feds find clues of gender bias at Microsoft, court filing says

By Matt Day The Seattle Times

U.S. Labor Department investigators told Microsoft this year they had found preliminary evidence of gender-based discrimination at the company, according to court papers filed this week in a gender-discrimination lawsuit.

In the filing in U.S. District Court in Seattle, Kelly Dermody, an attorney for three women suing Microsoft for alleged gender discrimination, said the federal agency issued “notice of violation” documents to Microsoft in May and June. The notices were related to a department “investigation of systemic gender discrimination of pay and promotions” at Microsoft, Dermody wrote.

She declined to comment beyond the court filings.

In a statement, Microsoft didn’t address the substance of the notices, but said it disagreed with their conclusions. The company is “committed to a diverse workforce, and to a workplace where all employees have the opportunity to succeed,” a spokeswoman said.

The federal government regularly reviews the practices of tens of thousands of employers, producing hundreds of notices, the spokeswoman said. “This is just one step in that process. We are continuing to work closely with the agency to answer questions they may have and to demonstrate our commitment to equal employment opportunity.”

The existence of the notices was revealed as part of the lawsuit, filed last year, that alleges Microsoft pay and promotion practices discriminate against women in technical and engineering roles.

Microsoft denies the allegations.

The plaintiffs, two current employees and one former employee, are seeking class-action status. Lawyers for the company and the women are currently sparring over the terms of the suit and documents Microsoft must turn over.

It is unclear what specific Microsoft practices the Labor Department’s notice of violation documents are related to, or which business group they target.

The documents were produced by the Office of Federal Contract Compliance Programs (OFCCP), the department’s unit charged with making sure federal contractors adhere to regulations prohibiting discrimination based on race, gender, disability and other protected characteristics.

Notices of violation like those Microsoft received are issued when investigators find “an ample evidentiary record” supporting a finding of discrimination in violation of the law, the OFCCP says, but they are preliminary and not themselves a final indication of wrongdoing.

After such a notice, the Labor Department and the company under audit typically negotiate a settlement to bring the company into compliance, agree to dismiss the claim, or, in rare cases, take a dispute to court, employment lawyers say.

A Labor Department spokesman confirmed that the agency has “an open investigation” of Microsoft, but declined to comment further.

The probe comes at a time of intense scrutiny of the technology industry’s hiring and pay practices.

Critics have said Microsoft and other technology giants have done a poor job of building a workforce that looks like broader society, particularly in engineering and leadership roles that are disproportionately held by white men.

Microsoft said last year that women accounted for 26.8 percent of its workforce, down from 29 percent a year earlier as layoffs landed on units, including those acquired from Nokia, that employed a higher percentage of women than the company as a whole.

The majority of violations the OFCCP uncovers are technical errors, rather than cases of outright discrimination, employment lawyers say.

Such violations include failure to do proper recruiting outreach or record keeping, and missteps in affirmative-action planning and execution.

Notices of violation, as a step in a longer process, typically aren’t made public.

Microsoft’s were, in a filing by the plaintiffs’ lawyers in the putative class-action suit in federal court in Seattle. The women in the case say they were passed up for promotions and pay raises in favor of less-qualified men, and contend Microsoft’s controversial former performance-review system unfairly held back female employees.

Holly Muenchow, one of the plaintiffs and a Microsoft employee since 2002, said in court documents that a Labor Department investigator interviewed her over the phone in May.

During the conversation, she said, she was told the department had interviewed dozens of Microsoft employees, including other female engineers, as part of an investigation into systemic gender discrimination at the company. Investigators had also reviewed Microsoft’s written policies, as well as internal complaints of discrimination filed with human resources, Muenchow says.

This week, Dermody, who represents Muenchow, said in court documents a Labor Department lawyer told her, Dermody, that the OFCCP had sent Microsoft two notices of violation as part of the investigation. Microsoft has supplied Dermody and her team with heavily redacted copies of the notices, she said in the filing.

In recent years, the OFCCP has typically completed about 3,000 regular audits annually, and more than 100 investigations that began because of a complaint.

About three-quarters of audits end with investigators finding the company in compliance with the law, according to federal data. Some 22 percent end with a settlement agreement, and 2 percent are resolved with an agreement that includes a financial penalty.

John Fox, a partner with the Fox, Wang and Morgan employment law firm, and a former OFCCP official, said that between 1 and 2 percent of cases typically conclude with a finding of illegal discrimination.

Such audits can take years.

Comcast last year agreed to a settlement with the OFCCP in which the cable provider paid $190,000 in back wages and reformed its hiring practices after investigators found that Comcast’s Everett office steered 96 women into lower-paying, less-technical roles, and disproportionately rejected about 100 African-American, Asian and Hispanic job applicants.

The notices of violation that led to the Comcast settlement were issued in 2011.

Microsoft and its subsidiaries have been the subject of at least 14 completed OFCCP probes since 2010, according to federal data. One, involving a breach of record-keeping standards by the Redmond company, was settled in 2012 with Microsoft’s agreement to correct the error.

The rest, including a probe raised by a complaint about accommodations for people with disabilities, resulted in the department finding Microsoft had complied with federal rules.

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