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Microsoft, Wells Fargo Diversity Hiring Pledges Under Federal Scanner

The U.S.

· 10/07/2020 05:46

The U.S. Labor Department contacted Microsoft Corporation (NASDAQ:MSFT) and Wells Fargo & Co (NYSE:WFC) last week questioning their diversity hiring pledges, reports the Wall Street Journal.

What Happened: Craig Leen, director of the Office of Federal Contract Compliance Programs (OFCCP) in a letter dated Sept. 29, asked Microsoft to prove that the actions taken by the company to fulfill its pledge of hiring double the number of Black managers and senior leaders in the U.S. by 2025 does not violate federal laws prohibiting racial discrimination.

Wells Fargo, which made a similar pledge in June, also received a letter dated Sept. 29 from the agency, reminding them that quotas are prohibited.

Microsoft's Corporate Vice President and General Counsel Dev Stahlkopf responded in a blog post about being confident of the company's diversity initiatives complying with the U.S. employment laws.

Why It's Important: After the killing of George Floyd in May, several companies made pledges for racial equality by hiring more Black employees.

Black employees form 4.5% of Microsoft's U.S. workforce and less than 3% of senior roles. For Wells Fargo, Black employees form 6% of senior management compared to 13% U.S population.

Earlier this summer, Wells Fargo CEO Charlie Scharf caused a stir with his comments on a lack of diversity for employees and executives for which he had to issue an apology in September.

"Although contractors must establish affirmative action programs to set workforce utilization goals for minorities and women based on availability, contractors must not engage in discriminatory practices in meeting these goals," Craig Leen wrote in the letter.

Price action: On Tuesday, MSFT shares closed 2.1% lower at $205.91, WFC shares closed down 1.1% to $24.18.