We develop and test a more comprehensive theory of the sources and effects of workplace favoritism by drawing on a large, agency-wide sample of U.S. Federal Aviation Administration employees. We report how members of various underrepresented groups differ in their perceptions of a variety of sources of favoritism. We find that their perceptions of friendship favoritism are an important source of perception of workplace favoritism for all employees. We show that perceptions of favoritism are negatively associated with employee trust in their organizations and coworkers, commitment to their organizations, willingness to speak up, and pay satisfaction, with friendship favoritism significantly dominating over most other sources. Further, we find that team leaders, supervisors, managers, and executives, with their greater knowledge of organizational processes, report less favoritism. This and previous research provide practical guidance on how greater transparency may reduce employee perceptions of favoritism in the federal workforce while avoiding discredited formalistic constraints.