As Silicon Valley startup Palantir comes under scrutiny for its alleged discrimination against Asian job applicants, the situation is a reminder that Asians too face challenges in a technology industry that struggles with a lack of diversity.

Palantir, a Palo Alto, California-based startup worth $20 billion, is the subject of a lawsuit by the U.S. Department of Labor. The department has gone after the data-mining company over hiring practices that it alleges "routinely eliminated" Asian applicants who were "as qualified as white applicants."

Palantir has denied the allegations, and says it plans to fight the lawsuit. Should Palantir lose the case, it could result in the cancelation of its many government contracts.

This, however, is not the first time that discrimination against Asians in tech has been brought up.

Although Asians make up roughly one-third of the work force at Silicon Valley companies, their representation begins to dwindle as you go higher up the corporate ladder, according to a report released in 2015. While Asians make up 27.2 percent of professionals at top tech companies, their numbers fall to 18.8 percent at the managerial level and again to 13.9 percent in the executive ranks.

These results were found in "Hidden in Plain Sight: Asian American Leaders in Silicon Valley," a report by the Ascend Foundation, which is a nonprofit organization for Asian business professionals. The study analyzed the 2013 employee data at Google, Hewlett-Packard, Intel, LinkedIn, and Yahoo.

Despite their broad representation at the entry level, Asians face a tough time moving up. The study found that whites have a 150 percent advantage over Asians when it comes to promotions to the executive level. The figure is even more drastic when comparing white men versus Asian women, with the white men enjoying a 260 percent advantage.

Palantir's situation is even more extreme. The Department of Labor alleges that Palantir froze out Asians at the applicant level, essentially saying that just getting in the door was a challenge.

Among the chief reasons cited for this discrimination was its reliance on an employee referral system. Such systems are often criticized by proponents of tech diversity.

The referral system "often perpetuates whatever inequities the company's work force already has," Rose Darling, a lawyer for the Department of Labor, told Forbes. "If you are going to use a pool of people to refer new employees, the candidates you get tend to reflect the population of the people referring them. Those systems, when not checked, can lead to freezing out certain groups that aren't already represented at the company."

Published on: Sep 27, 2016