Facebook is being investigated for 'systemic' racial bias in hiring and promotions

• Facebook is being investigated for "systemic" racial bias, after job applicants and one manager sued it alleging discrimination.
• The "systemic" designation means Facebook could have to pay more money if found guilty.
• The Equal Employment Opportunity Commission has not brought any allegations against Facebook.
• Visit the Business section of Insider for more stories.

A US agency investigating Facebook for racial bias in hiring and promotions has designated the probe as "systemic," attorneys for three job applicants and a manager who claim the company discriminated against them told Reuters on Friday.

A "systemic" probe means the agency, the Equal Employment Opportunity Commission, suspects company policies may be contributing to widespread discrimination.

The EEOC typically resolves disputes through mediation or allowing complainants to sue employers. But agency officials designate a few cases "systemic," enabling investigators to rope in specialists to analyze company data and potentially bring a broader lawsuit representing entire classes of workers.

Facebook operations program manager Oscar Veneszee Jr. and two applicants denied jobs brought a charge last July to the EEOC, and a third rejected applicant joined the case in December. They have alleged Facebook discriminates against Black candidates and employees by relying on subjective evaluations and promoting problematic racial stereotypes.

The designation of the EEOC's probe has not been previously reported.

The EEOC has not brought allegations against Facebook. Its investigation, which may last months more, may not result in findings of wrongdoing. The agency declined to comment.

Facebook spokesman Andy Stone declined to comment on the status of the probe or specific allegations but said that "it is essential to provide all employees with a respectful and safe working environment."

"We take any allegations of discrimination seriously and investigate every case," he said.

The EEOC brought in systemic investigators by last August and received detailed briefing papers from both sides over the last four months, said Peter Romer-Friedman, an attorney at Gupta Wessler representing Veneszee and the job candidates.

Employment law firms Mehri & Skalet and Katz Marshall & Banks also are helping the workers.

The EEOC's Baltimore, Pittsburgh and Washington offices are involved, attorneys from the firms said.

Facebook's counsel, Covington & Burling, did not respond to a request for comment.

Increasing racial and gender diversity has been a persistent challenge for the nation's largest tech companies, which at times have blamed a shortage of qualified candidates from underrepresented groups. But tech workers have grown emboldened to publicly challenge that notion and allege in formal complaints that biased employment practices cause disparities.

Romer-Friedman said he and his colleagues told the EEOC in a submission last month that one such Facebook policy is awarding employees bonuses of up to $5,000 when a candidate they refer is hired. Referred candidates tend to reflect the makeup of existing employees, disadvantaging Black professionals, he said.

Facebook said about 3.9% of its US employees as of last June were Black.

David Lopez, a former EEOC general counsel now teaching at Rutgers University, said that systemic investigations are significant because of the additional resources involved. When they result in allegations of wrongdoing, multimillion-dollar settlements sometimes follow, he said, citing recent cases against Dollar General Corp and Walmart Inc.

In the year ended last September 30, 13 of the 93 EEOC merit lawsuits were systemic, according to agency data.