I'm talking about the Federation as an institution primarily, not racist members of its populace.
Institutionally, it does not condone or endorse racism, because race is considered irrelevant at that level. You're a Federal citizen, your bloodline/race shouldn't be more than a minor footnote for census purposes at most. That kind of thing. As far as paperwork goes. Obviously this is not the case for people seeking office, who will of course stir shit whenever and wherever they get the opportunity.
Are there racist shitbags all over among the citizenry? Sure, it's like that in every empire. But the Federation, as an institituion, is not racist, from what I see. What happens is groups that come to the Federation and become citizens are bringing excess baggage in terms of beliefs and ways of doing things that then clash with the system like that.
The Federation, as an institution, doesn't see any difference between a Sebiestor and a Vherokior. As far as it is concerned, they're both "Federation citizens of Matari descent/origin". As long as they're meeting whatever obligations they have (taxes, etc.), they're entirely below the radar. Issues only arise when, to continue with the example, Minmatar citizens of the Federation start applying clan and tribe as a way of discrimination against their own people, just as they might have done back in the Republic where it would not only be acceptable, but encouraged and expected by society.
In the Republic that kind of shit is totally a fact of life. In the Federation, it's not supposed to be, and on average I expect that it isn't.
To be fair, I read that whole arc (the employment one) as being a bit of a "this is an example of the bad things that can result from affirmative action legislation" more than anything else, but that's another bucket of worms I'm a little hesitant to get into since It Could Offend.