Trump administration targets diversity hiring by contractors
American companies promising to hiremore Black employees in leadershiproles and teach their workforce about racism are getting a message fromPresidentDonald Trump’s administration: Watch your step if you want to keep doing business with the federal government.
Trump’s Labor Department is using a 55-year-old presidential order spurred by the CivilRightsMovement to scrutinizecompanies likeMicrosoft andWells Fargo over their public commitments to diversity. Government letters sent last week warned both companies against using “discriminatory practices” to meet their goals.
Microsoft has brushed off the warnings, publicly disclosing the government inquiry and defending its plan to boost Black leadership.
But advocates for corporate diversity initiatives worry that more cautious executives will halt or scale back efforts to make their workplaces more inclusive out of fear that a wrong step could jeopardize lucrative public contracts. The agency has oversight over the hiring practices of thousands of federal contractors that employ roughly a quarter of all American workers.
“For tech companies that don’t care about these issues, the pronouncements are a dog whistle that they can carry on discriminating the way they already have,” said Laszlo Bock, an executivewho ranGoogle’s human resources division for more thana decade andnow leads software startup Humu.
Bock said those who do care, however, will see Trump’s actions as political “sound and fury” thatwill be hard to enforce.
“It’s not at all illegal to strive to have a workforce that reflects the makeup of your nation,” Bock said.
Democratic President Lyndon B. Johnson’s 1965 order was designed to “adjust the imbalances of hiring that are a legacy of our racist past,” said employment attorney and public contracting expert Daniel Abrahams.
“Trump is turning it around into an instrument of white grievances,” he added.
The president has also ordered theLaborDepartment to set up a newhotline to investigate complaints about anti-racismtraining sessions that Trump has called “antiAmerican” and “blame-focused.” The order signed last month calls attention to discussions of deep-seated racism and privilege that could makewhiteworkers feel “discomfort” or guilt.
Trade groups representing the tech and pharmaceutical industries are protesting
Trump’s new order, saying it would restrict free speechandinterferewithprivate sector efforts to combat systemic racism.
Trump’s executive order is a twist on Johnson’s 1965 directive and amendments that followed that set rules banning discriminatory practices at companies that contractwith the federal government. It requires contractors to take “affirmative action” to open the doors to hiring minorities and women.
But the Labor Department is raising questions about the specificity of commitmentsmade by executives addressing racial injustice in response to thewave of Black LivesMatterprotests that followed May’s police killing of
George Floyd inMinneapolis.
Microsoft CEO Satya Nadella said in June that the tech company would double the number ofBlack andAfrican Americanmanagers, senior individual contributors and senior leaders by 2025. Wells Fargo CEO Charles Scharf made a similar commitment in June to doubling Black leadership over the next five years.
Abrahams said he doubts that the Labor Department has much of a case against companies that are trying to boost diversity, though “there’s some discrimination against white people that’s probably actionable,” and courts have danced around the question ofwhat happens when employers set “inflexible” targets for racial quotas.
But he said it’smore likely the Trump administration is using the move as a political tactic ahead of the presidential election. Trump has criticizedworkplace training that he says is based on critical race theory, or the idea that racism is systemic in the U.S.
Dozens of companies have ramped up their efforts to bring more Black and other minority employees into their ranks since the protests over Floyd’s death shook the country and triggered a national reckoningover racism. Many have announced initiatives specifically targeting the African American community.
The CEOs of the 27 largest employers in New York — including Amazon and J.P. Morgan — formed a coalition to recruit 100,000 people from low-income Black, Hispanic and Asian communities in the city by 2030. More than 40 companies have joined a pledge to add at least one Blackmember to their board of directors by 2021.
Several other top government contractors have set numeric goals for adding Black or Latino employees, including consulting firms Accenture and Deloitte.
Johnny Taylor, the CEOof the Society for Human ResourceManagement, said he has asked for a conference with U.S. Labor Secretary Eugene Scalia to seek clarity about the intention of the inquiries.
“I want them to ensure the companies are complying with the lawbut that investigation doesn’t result in a chilling effect on diversity and inclusion programs,” said Taylor, whose organization represents 300,000 human resource professionals across the world.
Taylor said he believed the policies announced by Microsoft and Wells Fargo amounted to aspirational goals, rather than quotas based on race. But he said announcing numbers may have opened companies to discrimination complaints.
Companies can protect themselves against claims of discrimination by widening their applicant pool to ensure a large enough number of qualified minority candidates, said Mabel Abraham, an assistant professor ofmanagement at Columbia University. The challenge, she said, is that companies have to show they have measurable diversity goals to attract talented minority applicants in the first place.
“Companies that are going to get the applicants are the ones that actually have minorities in top roles and that are putting out messages of race and diversity,” she said. “It’s a chicken-andegg problem.”