PayPaI January 29, 2018 VIA AIL ONLY Bruce G. Andersen National Office FOIA Coordinator Office of Federal Contract Compliance Programs U.S. Department of Labor 200 Constitution Avenue, NW, Room 03325 Washington, DC 20210 Re: PayPaI Holdings, Inc. - Business Information Submitter Notification - FOIA Request Tracking No. 838133 Dear Mr. Andersen: i am the Director, Legal - Employment for PayPal Holdings, Inc. ("PayPal" or "the Company"). We were informed that the Offioe of Federal Contract Compliance Programs received a request pursuant to the Freedom of Information Act or "the Act"). 5 U.S.C. 552 from the Center for investigative Reporting for disclosure of all EEO-1 Reports filed by the Company during the 2015 filing period. By letter received on or about November 29, 2017. you notified PayPal of the request and invited PayPal to submit any objection within thirty days, In an email exchange on December 28, 2017, you kindly granted PayPal an extension until January 29, 2018 to respond to the request. Although PayPal is committed to diversity and inclusion, PayPal objects to the disclosure of both its consolidated EEO-1 Report and all EEO-1 Reports related to its individual establishments. PayPal operates a worldwide network of online payment systems through subsidiaries which support online money transfers utilized by individuals. vendors, auction sites, and other commercial users. As such, as a matter of competitive advantage, PayPal carefully guards information about its staffing, its product lines, and the workforce composition for all ofits subsidiaries. The disclosure of the data contained in any of its EEO- 1 Reports, particularly its individual establishment reports, would cause substantial competitive harm to PayF'aI, Therefore. because PayPal's EEO-1 Reports are covered by FOIA Exemptions 3 and 4 (5 U.S.C. 552(b)(3) and we respectfully request that this information not be disclosed. I. BACKGROUND PayPal is a dynamic global corporation With decentralized operations spread across multiple subsidiaries and locations throughout the world and within the United States. PayPal's products are concentrated in the field of digital payments, which is rapidly evolving due to the development of new technology, the increasing interest in blockchain-hased currency, and the entry of both new startup companies and traditional brick and mortar financial institutions as participants in the digital payments market. Foreign and domestic January 29', 2018 PageZ companies are continually attempting to move into new markets and to increase existing market shares. Due to rapid changes in technology, companies such as PayPal must devote substantial resources to product research, design, and development. In order to remain competitive, PayPal must closely guard information that would enable its competitors to anticipate and, thus, exploit, shifts in market strategy. Given this dynamic competitive environment and the pressures to develop new products and to reduce costs on established products, the industry places a high premium on obtaining current, accurate information about competitors? operations. Therefore, PayPal carefully guards information about its workforce composition. Diversity and inclusion are of paramount importance to PayPal. Dan Schulman, PayPal CEO, recently outlined PayPaI?s position on this issue: PayPal is committed to making a positive difference in the world. Our ability to deliver on our mission of democratizing financial services and capabilities starts from the inside; by building a global team of employees that reflects the communities where we work and live, and the diversity of the customers we serve. That?s why Inclusion is a core value and defines who we are and everything we do. For PayPal, bringing this value to life means building an ever more inclusive company culture, built on respect for individual differences, life experiences, knowledge, and the self-expression of our colleagues. See gayg PayPal has deemed its EEO-1s to be confidential and does not make them available to the public. Accordingly, PayPal has taken great care to ensure the confidentiality of its EEO-1 Reports, including appropriate steps to protect this competitively important information and to ensure that third parties are not permitted to obtain it in the normal course of business. Internally, PayPal limits access to this information. II. LEGAL STANDARD provides that any person has the right to request access to federal agency records or information. However, agencies must withhold information pursuant to specific exemptions and three exclusions contained in the statute. Here, two of the exemptions apply. First, Section 552(b)(3) of the Act creates certain exemptions to the disclosure obligations otherwise provided in the Act. The Trade Secrets Act, 18 U.S.C. 1905 (?Section 1905?), prohibits the disclosure by federal agency personnel of confidential trade, statistical and commercial data of any corporation and is applicable to disclosure requests made under the FOIA. Corp. v. Brown, 441 US. 281 (1979). Second, Section January 29, 2018 Page 3 552(b)(4) of the FOIA exempts from disclosure matters that consist of ?trade secrets and commercial or financial information obtained from a person and privileged or confidential.? Contract Freiqhters. Inc. v. Secretary of the US. Dept. of Transportation, 260 F.3d 858 (8th Cir. 2001) (internal citations omitted) (noting that it is well established that when the information sought to be disclosed is provided to the Government on a mandatory basis, commercial or financial matters are confidential and may not be released when ?disclosure of the information . . . is likely to have either of the following effects: (1) to impair the Government?s ability to obtain necessary information in the future; or (2) to cause substantial harm to the competitive position of the person from whom the information was obtained"). Disclosure of PayPal's EEO-1 Reports to the Center for Investigative Reporting, Which has demonstrated an intent to widely distribute the data contained therein, would also violate the regulations applicable tothe examination and copying of its documents. 41 C.F.R. Part 60-40. TheSe regulations specifically state that they are designed to implement the Act, and the exemptions from disclosure outlined in the paragraph above are equally relevant with respect to these regulations as well. FUrther, PayPal?s Reports, specifically its individual establishment reports, contain confidentiai commercial or financial information, staffing patterns, workforce distributions and resource allocation. Disclosure of such data would provide competitors with information with respect to the company?s shift and change in personnel, which is not currently available to the public. Indeed, the release of this information would result in substantial competitive harm. PayPaI clearly meets the requirements for exemption from disclosure under the FOIA and under the other applicable statutes and regulations referred to above. Accordingly, its EEO-1 Reports should not be disclosed. Ill. DISCLOSURE OF THE REPORTS WOULD CAUSE SUBSTANTIAL COMPETITIVE HARM TO PAYPAL PayPal submitted the information set forth in its EEO-1 Reports in order to comply with the requirements of Title VII of the Civil Rights Act of 1964, as amended, and EC. 11246 and its implementing regulations. The disclosure of its EEO-1 Reports, particularly its individual establishment reports, to the Center for Investigative Reporting could result in substantial harm to its competitive position in the industries in which it operates in at least two ways. First, it would permit a competitor to ascertain the costs and volume of services of PayPal?s and its subsidiaries. Second, the Reports could be used to measure the resources being dedicated to research and deveIOpment, particularly in the product or technology areas, by geographical location, which is a competitive concern. Thus, PayPal respectfully submits that the EEO-1 Reports should not be disclosed. A substantial part of PayPal?s business is dependent upon competitively-negotiated contracts with merchants that use PayPai?s payments services and contracts with a variety of service providers. The development, testing, and marketing of the products and services PayPal offers is labor intensive; that is, much of the cost of any single item is attributable to the cost of paying the employees, some of whom are skilled technicians and professionals, January 29, 2018 Page 4 such as engineers, and some of whom are unskilled. The requested EEO-1 Reports, particularly those reports containing information on individual establishments, would be useful to a sophisticated competitor interested in determining PayPal?s business development and business performance strategies. The EEO-1 Reports provide the total number of employees in each of nine major job categories?Executive/Senior Level Officials and Managers; FirstIMid-Level Officials Managers; Professionals; Technicians; Sales Workers; Administrative Support Workers; Craft Workers; Operatives; Laborers Helpers; and Service Workers. Armed with this information, a competitor could, for example, discover PayPal?s business development strategies by analyzing its workforce composition by location. - Data on PayPal?s workforce composition could also provide a competitor with useful insight as to how it might more successfully compete with PayPal by supplementing its own workforce to match or exceed PayPal?s staff. A competitor might seize the opportunity to enter a particular sector or region if PayPal's workforce indicated that the Company had reduced its resources in a particular area. Not surprisingly, for these reasons, disclosure of EEO-1 Reports has routinely been forbidden because of the consequent harm to the competitive position of the submitter. S33, Rubbermaid. Inc. v. Kleppe, 14 Fair Empl. Prac. Cas. 1422, 1423 (D. Md. 1976); Westinqhouse Electric Corp v. Schlesinger, 92 F. Supp. 1246 (ED. Va. 1974), gig, 542 F.2d 1190 (4th Cir. 1976); United States Steel Corp. v. Schlesinger, 8 Fair Empl. Prac. Gas. 923 (ED. Va. 1974), aff?d sub nom., Westinghouse Electric Corp v. Schlesinger. 542 F.2d 1190 (4th Cir. 1976); Holidav Inn. Inc. v. Kleppe, 13 Fair Empl. Prac. Cas. 1337 (W.D. Tenn. 1976). The US. Supreme Court in Detroit Edison Co. v. NLRB. 440 US. 301 (1979) has also recognized that equal opportunity data submitted under Government mandate is, sensitive data that should be afforded protection from disclosure. Further, courts have emphasized that agencies should carefully assess a request and ?recognize the legitimate concerns of the contractors involved.? Gen. Motors Corp. v. Marshall, 654 F.2d 294, 301 (1979). in General Motors Corp.. the court explained the necessity, for agencies to exercise such caution: Once an agency has released a particular record pursuant to an request, that record is available to all the world for all time: the agency can neither prevent the requester from disseminating the document to others nor deny a later request for the same document by a different party. The agency must assume that any document disclosed under the FOIA will eventually and inevitably find its way into the possession of the submitter?s competitors. at n.16. January 29, 2013 Page 5 PayPal clearly meets the requirements for exemption from disclosure under the FOIA and other applicable statutes and regulations;' PayPal's Reports should therefore not be released. IV. CONCLUSION For all of the reasons stated above, PayPal objects to the disclosure of both its consolidated EEO-1 Report and all EEO-1 Reports related to its individual establishments to the Center for Investigative Reporting Further, the Company. consistent with the Department of Labor's regulations set forth at 29 Part 70.26, hereby respectfully requests that your office give it sufficient advance notice of any decision on this matter so that it may take appropriate action, including exhausting all appeal procedures available within the Department of Labor and in a court of law. PayPal further requests that the subject materials not be released prior to or during the pendency of any such appeal. If you have any questions, or require further clarification of our pos as ex ressed herein, please do not hesitate to Contact me at-Qpaym 0rd ason enn Director, Legal - Employment PayPaI Holdings, Inc. Disclosure ofPayPal's EEO-1 Reports would also violate the OFCCP's regulations applicable to the examination and Copying or its documents. 41 C.F.R. Part 6040, These regulations expressly implement FOIA. 41 50-401. Thus. the OFCCP's regulations prohibit disclosure for the same bases set forth here under FOIA,