The Prudential Insurance Co., in a potential test of the government's power to gather information from private industry, yesterday was barred from all federal contracts for refusing to give employment data to the government in a routine antidiscrimination investigation.
The action was the largest contract debarment in history and could cost Prudential more than $200 million, government officials said. It also prohibits private firms from using Prudential insurance for employes working on federal contracts.
Prudential said yesterday that it plans this week to ask a federal judge in Newark, N.J.., where the company has headquarters, for a temporary injunction against the government action. The outcome of that case could determine how much information the government can obtain from private employers, Prudential lawyers said. The Labor Department, which initiated the action, has not accused the nation's largest insurer of discriminatory employment practices, but department officials said they need the company's employment computer tapes for their investigation.
Prudential refuses to turn over the tapes, which are becoming an increasingly popular way for businesses to store information. Prudential claims its tapes contain confidential information -- such as employes' names, Social Security numbers, telephone numbers and spouses' names -- not relevant to an antidiscrimination probe.
Prudential said it would provide the government with the pertinent information on the tapes or would hand over the tapes if the Labor Department agreed not to alter the data on them, to return them when the review is completed and to provide Prudential with copies of all printouts and an analysis of its conclusions.
The Labor Department called these conditions unacceptable.
It said that as an investigative agency it should not have Prudential looking over its shoulder during the review or telling Labor officials what information they can have and in what form.
"For over 14 months now, the company, which gains financially from its federal business, has refused to provide the neccessary information that would enable the Office of Federal Contract Compliance Programs to judge whether [Prudential's] won employes have also gained," said Assistant Labor Secretary Donald E. Elisburg.
"It is our judgment that these tapes provide the most complete, accurate and economical tool for making a fair evaluation of the company's overall job practices," he said. "Without suchbasic job data, it is impossible for us to analyze the company's personnel systems and practices, which in our estimation are the key to dealing with today's more complex and sophisticated forms of job bias.
"We are not talking about unusual demands here. We are talking about cooperation in submitting existing records that in the past we have asked for and received from many other employers."
A Prudential spokesman said the company "has cooperated with the government during the compliance review, has released massive amounts of employe records and has offered additional information to the government which would enable it to conclude its review."
The government also contend that printouts of tapes are unclear and difficult to read, and sometimes inaccurate. In order for printouts to be useful, it says it would have to transfer them back onto tapes at a cost of $123,000. It would cost $15 per tape to copy each one, Labor Department officials said.
In a letter to department officials last month, Prudential said the tapes contain "highly confidential, commercial and financial information, the improper disclosure of which could cause substantial competitive injury to Prudential, and serious invasions of privacy of an estimated 15,000 Prudential employes."
Information determined by Labor Department officials to be confidential, commercial or financial in nature does not have to be disclosed, department officials said. Prudential contends that the information the government is seeking is confidential.
The case could set an important precedent by outlining how much information the government is entitled to obtain from a private employer, particularly when that information is on computer tapes.
A Prudential attorney said that federal regulations provide for deletion of some information from data recorded on paper, but that deletion of material from tapes has to yet been decided by the courts.
The action against Prudential is the25th debarment since 1965, and the third for a Fortune 500 firm in the last year.
Earlier this month, the Labor Department barred Firestone Tire and Rubber Co., the nation's second-largest tire maker, from doing business with the government. The company was charged with failing to implement an acceptable affirmative-action program at plant in Orange, Tex.
Earlier, Uniroyal Inc., the nation's third-largest tire manufacturer, was debarred because of alleged noncompliance with federal antidiscrimination orders. Uniroyal settled the case last Oct. 23 by agreeing to pay $5.2 million in back wages to 750 women at its Mishawaka, Ind, plant.