Accounting firm Deloitte agreed to pay $21.5 million to settle Department of Justice allegations that it violated the False Claims Act by failing to comply with anti-discrimination requirements in federal contracts and discriminating on the basis of race or sex, the department announced Tuesday.
The settlement resolves allegations that Deloitte violated the False Claims Act by failing to comply with anti-discrimination requirements in its federal contracts and allegedly discriminating against employees and applicants on the basis of their race or sex, according to the DOJ.
The DOJ said business units within Deloitte received monthly summaries tracking the “demographic goals” and alleged that the company’s partners, principals and managing directors were evaluated, in part, based on their contributions to helping it achieve its workforce composition goals.
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The DEI goals, according to the DOJ, attempted to boost the representation of the Black and Hispanic communities in promotion decisions.
“Government contractors cannot reward or penalize employees based on race or sex — and labeling the practice DEI does not make it lawful,” Attorney General Todd Blanche said in a statement. “The Justice Department will aggressively pursue government contractors that have used taxpayer dollars to fund unlawful discrimination.”
Deloitte denies allegations of discriminatory conduct and said the settlement agreement does not represent an admission of liability. The company said it was pleased to resolve the matter to “avoid the cost and distraction of protracted litigation.”
The DOJ said the claims resolved in the settlement are allegations only and that there has been no determination of liability.
The settlement also resolves claims brought under the False Claims Act’s qui tam provisions by the American Alliance for Equal Rights, a group founded by conservative activist and affirmative action opponent Edward Blum, which allows private parties, known as relators, to bring cases on the government’s behalf and potentially receive a share of any recovery.
Whistleblowers are entitled to a cut of any recovery in these cases. Blum’s group will receive $4.3 million as part of Tuesday’s agreement, the DOJ said.
“Merit drives opportunity and promotion. Not someone’s sex or race,” Associate Attorney General Stanley E. Woodward Jr. said in a statement. “Today’s settlement is yet another example of this Department’s commitment to eliminating woke, unconstitutional practices from American workplaces.”
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This comes as the Trump administration has sought to crack down on DEI initiatives since the president’s return to the White House. This has included executive orders aimed at rooting out DEI practices, such as orders directing federal contractors and subcontractors to certify that they do not operate DEI programs that violate applicable federal anti-discrimination laws.
The administration has targeted public and private organizations over DEI, including government agencies and universities. The administration has argued that some race and sex-conscious DEI programs are discriminatory and undermine merit-based decision-making.
Many U.S. companies scaled back or amended diversity policies in the wake of Trump’s crackdown.
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