According to reports from Live Mint, the Department of Justice, and Business Standard, Deloitte has agreed to pay $21.5 million to resolve allegations that it violated federal contracting laws by discriminating based on race and sex. The settlement covers conduct that occurred between 2017 and August 2026, as announced by the DOJ. The accounting firm has denied engaging in discriminatory conduct and does not admit liability as part of the resolution, agreeing to pay $10 million in restitution and another $11.5 million to settle the matter. The DOJ announced Tuesday that the settlement resolves allegations that Deloitte violated the False Claims Act by failing to comply with anti-discrimination requirements in federal contracts, with the settlement being the latest reached under the False Claims Act through the US DOJ's Civil Rights Fraud Initiative, which was launched in May 2025.
As reported by Live Mint, the Justice Department alleged that Deloitte took race or sex into account when making decisions related to hiring, promotion, and staffing to achieve progress toward non-public race- and sex-based workforce composition goals. Business units within the company reportedly received monthly summaries tracking demographic goals, with representation or progress towards those goals highlighted in green, yellow, or red based on whether goals were exceeded, met, or fell significantly short. The investigation revealed that Deloitte assessed its Partners, Principals and Managing Directors (PPMDs), in part, on how they contributed to meeting these workforce targets, with compensation of around 150 of Deloitte's most senior PPMDs potentially affected for two years if their respective business units failed to meet demographic goals. According to the DOJ, the DEI goals attempted to boost the representation of the Black and Hispanic communities in promotion decisions. Investigators also alleged that race and sex were factored into promotion decisions to partner and managing director level, with business units assigned targets for the racial and sex composition of their annual PPMD classes. The department further alleged that Deloitte identified candidates by race and sex in a spreadsheet while circulating PPMD candidate lists, with those involved in selecting candidates then encouraged to promote specific employees to maintain the existing demographic mix.
The settlement includes $4.3 million to be paid to the American Alliance for Equal Rights, a group founded by conservative activist Edward Blum, which brought the case under the False Claims Act's qui tam provisions. As reported by the Department of Justice, this arrangement allows private parties to bring cases on behalf of the government and potentially receive a share of any recovery, with whistleblowers entitled to a cut of any recovery in these cases. The case was brought under the False Claims Act (FCA), a law historically used to police healthcare fraud, on the basis that Deloitte had falsely certified compliance with anti-discrimination clauses required of federal contractors. The DOJ emphasized that the claims resolved in the settlement are allegations only and that there has been no determination of liability. Deloitte stated it was pleased to resolve the matter "to avoid the cost and distraction of protracted litigation," with a company spokesperson telling the Financial Times that the settlement allows them to remain focused on attracting and developing exceptional talent with the skills and capabilities clients rely on every day.
According to Live Mint and the Department of Justice, the Trump administration has taken a tougher stance on DEI policies during President Donald Trump's second term, with Attorney General Todd Blanche stating that "Government contractors cannot reward or penalize employees based on race or sex — and labeling the practice DEI does not make it lawful." Associate Attorney General Stanley E. Woodward Jr. emphasized that "Merit drives opportunity and promotion. Not someone's sex or race," adding that "Today's settlement is yet another example of this Department's commitment to eliminating woke, unconstitutional practices from American workplaces." The administration has targeted public and private organizations over DEI, including government agencies and universities, with many U.S. companies scaling back or amending diversity policies in the wake of Trump's crackdown. Deloitte itself has already taken steps to comply with this pressure, cutting some of its DEI policies in early 2025 and telling staff to remove pronouns from email signatures. The pressure isn't confined to the US, with Google's decision to wind back its diversity hiring targets having already rippled into how multinationals frame DEI commitments outside America.
The Deloitte settlement follows President Donald Trump's January 2025 executive order directing federal contractors to eliminate DEI programs, and comes three months after IBM paid $17.1 million to settle similar allegations – the first such FCA settlement of its kind. Alphabet's Google and Verizon have also faced DOJ document requests over their workplace programs. The case demonstrates the comprehensive nature of the Trump administration's crackdown on DEI practices across multiple jurisdictions, with both federal and state authorities pursuing similar allegations against major contractors. Government agencies are taking a different approach, with DFAT's new diversity and inclusion strategy for its own workforce setting explicit representation targets through to 2027. For HR leaders at multinational or US-linked employers, the Deloitte case serves as a reminder that DEI program design – particularly anything resembling demographic targets tied to pay or promotion – is now squarely in US regulators' sights, regardless of where a firm is headquartered. US companies have faced growing scrutiny of their DEI practices during Trump's second term, with the Justice Department stating it will "aggressively pursue government contractors that have used taxpayer dollars to fund unlawful discrimination."
