"Companies also cannot take race-motivated actions to maintain a demographically 'balanced' workforce." — Commissioner at Equal Employment Opportunity Commission Andrea R. Lucas in Reuters, June 29, 2023

"An unlawful employment practice is established when the complaining party demonstrates that race, color, religion, sex, or national origin was a motivating factor for any employment practice, even though other factors also motivated the practice." — 42 USC § 2000e–2(m) of Title VII of the Civil Rights Act of 1964

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In the wake of the George Floyd protests, tech companies promised to hire more minorities. One company that claims to help them do it is Gem, and although you might not have heard of it, you’ve probably heard of some of its 1,200-plus clients: Reddit, Dropbox, Robinhood, Discord, Zillow, Stripe, Affirm, and Grammarly, just to name a few. Although Gem’s software is primarily used for things like non-race- and gender-based recruiting, payroll, and benefits management, John, (not his real name) — who worked for Gem as a sales development representative through a B2B outsourcing firm from March to July of 2021, told us that the prospective corporate clients he talked to were most interested in Gem’s “diversity enhancing” capabilities. Essentially, they had race- and gender-based hiring quotas and wanted to use Gem’s software to meet them. He said one prospective client, an executive at the Bay Area-based AI and robotics research arm of one of the world’s leading car manufacturers, told him explicitly: “I need more black candidates this month.”

According to its website, Gem’s software allows recruiters to track “gender and race/ethnicity throughout the entire hiring funnel.” Essentially, it appears to include a comprehensive race and gender tracking system designed to help companies fill race- and gender-based quotas with precision. For example, in a 2021 diversity webinar posted on YouTube, a Gem employee seemed to explain how the software could show how many candidates a company would need to reach out to if it had three engineering positions open, but didn’t want to hire men for them (in her words: “wanted to give women a chance”). In the same video, she demonstrated how to break down each stage in the hiring funnel by race, and explained (but did not show, probably for privacy reasons) how companies could further track how their recruiters’ own efforts break down along the lines of the company’s race- and gender-based hiring quotas, so that the company may “hold them accountable.”

All this requires a lot of data. According to a recent LinkedIn post by Gem founder Steve Bartel, this data can come from three sources:

• Self-ID: the demographic data collection on job applications

• Manual override: the recruiter reports your race and gender based on visual cues such as your LinkedIn profile picture

• Predicted: Gem’s proprietary AI determines a candidate's race and gender based on machine learning (Bartel notes this is only for aggregate/anonymized use, meaning that the UI doesn’t allow recruiters to see which race was assigned to individual candidates)

John told me that, of Gem’s features, its race- and gender-identifying AI was the biggest selling point. “A key part of the pitch was to tell clients that Gem uses AI and machine learning to determine race and gender.” (This is especially ironic, given the panic about “racist AI” that has consumed every discussion about artificial intelligence for years.)

“One thing that cracked me up was that recruiting/DEI buyers at companies would ask, ‘Is this legal?’” John told me. “Not because they were offended by how obviously racist the software was — they loved what they saw. The concern was pushback from their legal team.” He said this question was asked so frequently that Gem’s Chief Legal Counsel had a prewritten response to the question that would be passed along to clients who asked.

The "Diversity Recruiting" section of Gem’s website offers a slate of what it calls “Case Studies” — essentially customer testimonials — where companies explain how they used Gem to hire based on race and gender.

In a case study for payroll firm Gusto, Gem seems to indicate the company used its “Candidate Rediscovery” tool to hire based on candidates’ race and gender. In Gem’s language, Gusto used the tool to “unearth talent who is vetted — and diverse — ultimately reducing time-to-hire.” In other words, companies could use Gem’s software to find people with specific racial and gender-based characteristics that meet the position’s requirements and hire them quickly, while weeding out similarly qualified candidates who are, presumably, white or male or both.

In a case study about the telecommunications company Twilio, Gem seems to describe how one of its senior recruiters was able to avoid hiring men with their tool:

Gem’s metrics have also helped [the recruiter] zero in on stages in the interview process where the team is falling short on equitable gender hiring. “For one division, we intuited that we were hiring more women than the average team—and we were! We were prepared to roll off our passive sourcing efforts for that division, but I don’t like to make a move without looking at all the data first. That’s where Gem came through.” [The recruiter] dug through the data in more detail and discovered that the proportion of male candidates was actually increasing quarter over quarter—so much so that, by Q3, they would have made significantly more male than female hires. “If we hadn’t had access to that data, we wouldn’t have been able to identify that trend and strategize on how to allocate our resources properly.”

This is easily interpretable as: We thought everything was fine until Gem showed us that by Q3 we might hire a disproportionate number of men in a division that a disproportionate number of men applied to work in. It's worth noting that when announcing massive job cuts in 2022, Twilio’s CEO bragged that the layoffs had been carried out through an “Anti-Racist/Anti-Oppression lens.”

In another testimonial from Chili Piper, an inbound conversion platform for B2B revenue teams, the company’s Talent Ops Manager says she used Gem to discover that URG (under-represented group) candidates were dropping off after the company stopped including a video submission in the application (itself seeming to indicate that a significant proportion “URGs” were being advanced through the hiring pipeline because of their race or gender). She successfully lobbied to bring the video submission back and modified the assignment. “Now it’s like, sell us a new smartphone: something that really levels the playing field and lets us see candidates’ creativity, communication, and approach in action. It’s not necessarily entrenched in experience in tech and SaaS sales.” Since then, the company has “seen a decisive shift in the demographics of candidates who make it to the interview stage of our process. We have seen a 54% increase in URG candidates and a 31% increase in female-identified candidates making it to the first round of interviews. Offers extended to, and offers accepted by URGs have increased.”

In other words, Chili Piper's testimonial seems to indicate that Gem showed the company that when it stopped asking applicants to submit a video that allowed them to see their race and gender, they stopped hiring more minorities. So they brought video back, and seemed to effectively lower their standards by changing the assignment to one in which industry experience was deprioritized.

Gem’s own hiring practices also raise red flags. An internal jobs board from June 2021 provided to Pirate Wires shows that under a field titled “Diversity Search,” positions are either listed as “Open,” “Women,” “URM,” or “Women & URM,” suggesting that certain positions were closed off to straight white males, or perhaps that women and minorities were being sought after in those positions. We sent the screenshot of the internal job board — with company name and other identifying information redacted — to a tech industry employment lawyer, who said:

Without knowing more about the company or getting clarification on what some of the designations mean on the chart, it looks a bit problematic. The law allows companies to set “targets” and “goals” as they relate to the hiring, retention, and promotion of women, veterans, and underrepresented minorities (those targets/goals must be temporary). But the law does not currently allow private companies to set aside or otherwise designate specific positions for such group members. There are some grey areas for certain types of federal contractors, but it’s the exception to the rule.

As a non-lawyer, I’ll not comment on the legality of Gem’s hiring practices. However, I will say the company seems to use unorthodox recruiting methods. In Gem’s diversity webinar I referred to earlier, one of the hosts said, “Here at Gem, each time we open a new req [position], we actually focus solely on sourcing URGs, and in conjunction [with that] we don’t post the job on the career site until other levers need to be pulled…”

The host then explained how she found candidates of specific races and genders at Gem, telling the audience: “Sourcing for URGs may require you to shift some fundamental ideas you have about what a quote-unquote good candidate looks like.” Next, she described how she would go through LinkedIn, searching for candidates with stereotypically minority names, who use neo-pronouns, or who went to minority-majority schools, among other tactics.

When asked for comment, a representative from GEM told us “Our product provides interested customers with insights that help them build a diverse talent pipeline. We work closely with legal counsel to ensure our platform complies with all applicable laws and welcome potential customers looking to learn more to reach out to us."

Gem: a company that apparently doesn’t post some job announcements publicly without searching for specific races and genders on LinkedIn first. A company whose value proposition is to help companies hold their recruiters “accountable” for hiring too many of the wrong race and gender. A company that created an AI that predicts your race and gender. A company whose AI tracks race throughout the hiring pipeline so efficiently that, allegedly, even woke companies question its legality during sales calls. Gem is the company that vast swaths of the tech industry are using to hire.

So if you’re in the business, and you’re a Derrick O’Donnell or a John Chau, good luck out there. I think you’re gonna need it.

– River Page