The suit alleges Palantir systematically rejected Asian applicants even though they were as qualified as white applicants. Many of the rejections occurred during the resume screening and phone interview stages, according to the complaint, and relies on an employee referral process "that disproportionately excluded Asians."
The lawsuit alleges the practices that cause the discrimination are ongoing.
The Department of Labor filed the suit after reviewing applicant data Palantir is required to keep as a government contractor, said Rose Darling, an attorney involved in the lawsuit for the government. The government discovered Asian applicants fell out of consideration at a high rate after conducting a statistical analysis of the data.
Palantir hired 17 non-Asian applicants and 4 Asian applicants for an engineering intern position from a pool of applicants that was 73 percent Asian, according to the suit. The odds of that happening by chance are one in a billion, according to government calculations. In another instance, for a pool that was 85 percent Asian, Palantir ended up hiring 14 non-Asians and 11 Asians. The suit said the odds of that happening are 1 in 3.4 million.
Darling said the government is "putting the onus on the company to tell us" if it used ethnic-sounding names to disqualify candidates.
Palantir denied the government's allegations in a statement.
"Despite repeated efforts to highlight the results of our hiring practices, the Department of Labor relies on a narrow and flawed statistical analysis," the statement said. It said the analysis was related to three job descriptions and covers the years 2010 and 2011.
Founded in 2004, Palantir is a darling of Silicon Valley and valued at more than $20 billion. Venture capitalist Peter Thiel backed the company and serves as chairman. Thiel spoke at the Republican National Convention in July.
Palantir provides software and data analysis to the FBI, Army and the US Special Operations Command.
To maintain contracts with the government, contractors are obligated to ensure hiring practices aren't discriminatory. The government requires from those it works with, "promise of affirmative action and equal employment opportunity," according to the Department of Labor website.
"Our nation's taxpayers deserve to know that companies employed with public funds are providing equal opportunity for job seekers," Office of Federal Contract Compliance Programs Director Patricia Shiu said in the statement.
If Palantir doesn't end the practice, the OFCCP will request the cancellation of the company's contracts, as well as bar it from getting federal contracts in the future.