The U.S. Department of Labor filed an administrative lawsuit against Palantir Technologies on Monday, alleging that the data analytics and security company systematically discriminated against Asian job applicants.
Privately held Palantir helps government agencies track down terrorists and uncover financial fraud. It raised $880 million in funding late last year, for a $20 billion valuation, and is considered one of Silicon Valley's most secretive companies.
The lawsuit alleges Palantir routinely eliminated Asian applicants in the resume screening and telephone interview phases, even when they were as qualified as white applicants.
Palantir denied the allegations in a statement and said it intends to "vigorously defend" against them.
Palantir was co-founded by Peter Thiel and Joe Lonsdale, two of Silicon Valley's more influential investors and entrepreneurs. A representative for Thiel could not immediately comment on the lawsuit.
Ian Eliasoph, civil rights counsel for the Labor Department's Office of Federal Contract Compliance Programs, said Palantir was randomly selected for a review, which examines the number of applicants for a given position compared with applicants' demographics. If signs of discrimination are found, the office opens an inquiry to search for violations.
From 2010-2015 the compliance office conducted 20,918 compliance evaluations, 78 percent of which resulted in no violations. Some 22 percent had some violation and 2 percent had discrimination findings, according to the Government Accountability Office.
In one example cited by the Labor Department, Palantir reviewed a pool of more than 130 qualified applicants for the role of engineering intern. About 73 percent of applicants were Asian. The lawsuit, which covers Palantir's conduct between January 2010 and the present, said the company hired 17 non-Asian applicants and four Asians.
"The likelihood that this result occurred according to chance is approximately one in a billion," said the lawsuit, which was filed with the department's Office of Administrative Law Judges.
However, Palantir said the Labor Department relied on a "narrow and flawed statistical analysis relating to three job descriptions from 2010 to 2011."
Employment and civil rights attorney Cliff Palefsky said it was unusual to see hiring discrimination involving Asians.
But Tracy Chou, of Silicon Valley-based diversity and inclusion organization Project Include, said discrimination against Asians for senior positions has been widely publicized.
In 2015, Asians represented 27.2 percent of the professional workforce at Google, Hewlett-Packard, Intel, LinkedIn and Yahoo but were 13.9 percent of the companies' executive workforces, according to a study by pan-Asian professionals organization Ascend.
"Asians are not perceived to be the same as whites even though in these diversity conversations Asians get lumped together with whites because they're overrepresented in tech compared to the overall population," she said.
Since January 2010, Palantir has been a party to federal government contracts worth over $340 million, the lawsuit said.
The Labor Department sent Palantir a notice in October 2015 about its findings, according to the lawsuit. Both before and after that notice, labor regulators attempted to secure Palantir's voluntary compliance, the lawsuit said, but they did not succeed.
The lawsuit seeks relief for persons affected, including lost wages.