Deloitte has agreed to pay the U.S. government $21.5 million to resolve civil claims alleging its internal diversity practices breached anti-discrimination requirements attached to federal contracts.
The agreement resolves allegations brought under the False Claims Act because the Justice Department alleged that Deloitte falsely certified compliance with federal equal employment opportunity laws while using race- and sex-based metrics to guide internal workplace decisions.
Under the terms of the settlement, the accounting and consulting giant is to pay $10 million in restitution alongside an additional $11.5 million civil penalty.
The legal action originated from a whistleblower lawsuit filed by the American Alliance for Equal Rights, a conservative advocacy group led by activist Edward Blum and the organization will receive $4.3 million from the recovered funds.
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Federal prosecutors contended that Deloitte established non-public demographic targets and monitored progress across business divisions using monthly tracking reports.
The government alleged that these demographic targets directly influenced decisions regarding employee promotions, project staffing, and entry into specialized leadership development programs.
According to officials, approximately 150 of the firm’s senior partners, principals, and managing directors faced potential compensation adjustments based on whether their respective units achieved specified workforce demographic goals.
Justice Department representatives further argued that managing these initiatives generated administrative overhead costs that were ultimately passed on to federal agency clients through higher billing rates.
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“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.
Deloitte denied all allegations of wrongdoing and made no admission of liability as part of the agreement. Company representatives on the other hand stated that resolving the suit allows the firm to avoid the financial expense and operational distraction of prolonged court litigation while maintaining focus on client services.
The settlement marks the latest enforcement action targeting corporate diversity, equity, and inclusion programs among major federal suppliers, following a similar $17.1 million settlement by IBM.
In response to mounting regulatory scrutiny surrounding workforce policies, Deloitte has ceased publishing its annual diversity transparency reports.