Federated fairness-aware classification under differential privacy

Fault diagnosis in asset-intensive industries requires multiclass models trained on noisy, sensitive data collected across geographically distributed client sites. Federated learning enables collaborative training without centralizing data, but most approaches do not provide formal privacy guarantees for individual records stored at client sites and can degrade under label noise. To address these limitations, we develop a differentially private, distributionally robust framework for federated multiclass classification that provides sample-level privacy for records stored at each client. We build on a federated Wasserstein distributionally robust multiclass objective with the Crammer-Singer loss, solved using an Alternating Direction Method of Multipliers (ADMM)-based algorithm. To protect the released client updates, our method injects calibrated Gaussian noise into the proximal linearized client updates of both the local model and the local distributionally robust variable before aggregation at the central server, and we quantify the cumulative privacy loss using the moments accountant. We provide per-round sample-level $(ε,δ)$-differential privacy guarantees and an overall composed privacy guarantee across all training rounds, together with convergence results and an explicit privacy-utility tradeoff. Experiments on simulated industrial fault data and UCI benchmark datasets show that our method outperforms differentially private federated empirical risk minimization and stochastic gradient descent baselines in most tested settings, with the largest gains under strong privacy-induced noise.

Differentially private federated learning (DP-FL) enables clients to collaboratively train machine learning models while preserving the privacy of their local data. However, most existing DP-FL approaches assume that all clients share a uniform privacy budget, an assumption that does not hold in real-world scenarios where privacy requirements vary widely. This privacy heterogeneity poses a significant challenge: conventional client selection strategies, which typically rely on data quantity, cannot distinguish between clients providing high-quality updates and those introducing substantial noise due to strict privacy constraints. To address this gap, we present the first systematic study of privacy-aware client selection in DP-FL. We establish a theoretical foundation by deriving a convergence analysis that quantifies the impact of privacy heterogeneity on training error. Building on this analysis, we propose a privacy-aware client selection strategy, formulated as a convex optimization problem, that adaptively adjusts selection probabilities to minimize training error. Extensive experiments on benchmark datasets demonstrate that our approach achieves up to a 10% improvement in test accuracy on CIFAR-10 compared to existing baselines under heterogeneous privacy budgets. These results highlight the importance of incorporating privacy heterogeneity into client selection for practical and effective federated learning.

Differential privacy (DP) is increasingly deployed to limit membership inference risk in machine-learning systems. Prior work has shown that DP-SGD can widen accuracy disparities across demographic groups, but this framing treats fairness as a purely outcome-side concern. We argue that privacy cost, the information leakage borne by each group, is itself a form of harm, and adopt a compensatory-fairness framework in which a group that involuntarily bears greater privacy exposure is owed proportionally greater benefit from the system. From this principle we derive the Privacy-Cost Equity Ratio (PCER), a group fairness metric defined as a group's positive prediction rate normalized by its per-group overfitting gap. By a standard membership inference bound, this overfitting gap upper-bounds each group's vulnerability to inference attacks, making PCER a conservative measure of benefit relative to exposure. PCER needs only per-group train and test accuracy (no shadow models), making it a practical post-hoc audit tool. We evaluate PCER alongside standard fairness metrics across six benchmark--attribute combinations spanning tabular and NLP domains, under DP-SGD at a range of privacy budgets, and validate the overfitting-gap proxy against a direct threshold membership-inference attack. The results reveal patterns that outcome-based metrics miss. On COMPAS, PCER uncovers a persistent double disadvantage: the protected group bears both greater privacy exposure and worse predictive outcomes, something demographic parity gap masks entirely. Sensitivity analysis shows very strong privacy guarantees collapse both groups' overfitting to a numerical floor, rendering exposure-based audits uninformative in that regime. Together, these findings show that fairness audits of privacy-preserving systems must account for who bears the cost of protection, not only who benefits from its outcomes.