SAN FRANCISCO (Reuters) - (This version of the Sept. 26 story, corrects paragraph 4 to show that Palantir issued a statement denying the allegations, which was contained in an earlier story, instead of that Palantir could not immediately be reached for comment, adds Palantir comment on Labor Department analysis in paragraph 11 which was contained in an earlier story.)

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.</s>Image copyright Thinkstock Image caption Palantir has denied the allegations

Silicon Valley firm Palantir Technologies is being sued by the US government over alleged "systematic" discrimination against Asian applicants and members of staff.

A lawsuit has been filed which alleges that the firm has used discriminatory recruitment procedures since 2010.

The US Department of Labor is seeking compensation for those affected, including lost wages and promotions.

Palantir Technologies said it "firmly denied" the allegations.

"We are disappointed that the Department of Labor chose to proceed with an administrative action and firmly deny the allegations," the company said in a statement shared by the Wall Street Journal (subscription website).

"Despite repeated efforts to highlight the results of our hiring practices, the Department of Labor relies on a narrow and flawed statistical analysis relating to three job descriptions from 2010 to 2011."

On its website it says it "celebrate(s) difference and diversity - of background, approach and identity".

'One in 3.4 million chance'

The government identified three staff roles for which it alleges there was biased recruiting:

When recruiting for a quality assurance engineer, the firm hired six non-Asian staff and one Asian from a pool of 730 applicants, of whom roughly 77% were Asian

There were 1,160 qualified applicants for a software engineer position, of whom approximately 85% were Asian, but Palantir hired 14 non-Asians and 11 Asians

When recruiting for a quality engineer intern, the firm hired 17 non-Asians and four Asians. There were 130 applicants, of whom around 73% were Asian.

It said the likelihood of the software engineer position having been filled that way by chance was "approximately one in 3.4 million".

"From at least January 1, 2010 and going forward to the present, Palantir utilised a four-phase hiring process in which Asian applicants were routinely eliminated during the resume, screen and telephone interview phase despite being as qualified as white applicants with respect to the QA Engineer, Software Engineer and QA Engineer Intern positions," the lawsuit paperwork reads.

"In addition the majority of Palantir's hires into these positions came from an employee referral system that disproportionately excluded Asians."

The firm, which specialises in data mining, is credited with helping the US government find Osama Bin Laden.

Last year, Reuters reported that it was valued at $20bn (£15bn).</s>The US Department of Labor has alleged Palantir Technologies discriminates against Asian job applicants in its hiring and selection process .

The complaint follows a review by the Office of Federal Contract Compliance Programs, which evaluated Palantir’s hiring and selection processes beginning in January 2010, according to the Labor Department. The review found that Palantir relied on a system of employee referrals, which, along with its resume and phone hiring process, resulted in bias against Asians, the agency said.

Lisa Gordon, a spokeswoman for Palantir, said the companywill defend itself “vigorously” and denies allegations of bias. “The results of our hiring practices speak for themselves,” she wrote in an e-mail. “Despite repeated efforts to highlight these outcomes, the Department of Labor relies on a narrow and flawed statistical analysis relating to three job descriptions from 2010 to 2011.”

The Labor Department had no immediate further comment.

Cofounded by billionaire Peter Thiel, the data analysis company is among the most highly vaunted of Silicon Valley startups, securing a $20 billion valuation last year, in part for its contracts with the US Department of Justice’s Federal Bureau of Investigation, the Special Operations Command and the Army.

Silicon Valley has been under pressure to increase diversity across the industry. In recent years, technology companies have made public commitments to increasing hiring of minorities and women while releasing more information about the demographics of their workforces. Progress has been slow.

The Labor Department is asking an administrative law judge to award lost wages, interest, retroactive seniority and all other lost benefits of employment. The government said it filed the complaint after the department and Palantir were unable to resolve the findings through the conciliation process. Palantir’s government contracts should be cancelled, and it should be disbarred from securing future ones if it doesn’t meet the department’s demands, according to the complaint.

Meanwhile, Palantir is engaged in a separate dispute with the government. The Palo Alto, California, company sued the Armyearlier this year, claiming it favored existing contractors and blocked Palantir from competing for the first part of what will likely be a multibillion-dollar contract.
The Obama administration through the United States Department of Labor sues Peter Thiel's Palantir Technologies for alleged discrimination against Asians in its hiring practices.