Labor & Employment Law Daily Wrap Up, INDUSTRY NEWS, TRENDS—Deloitte to pay over $21M to resolve DEI-related False Claims Act claims by DOJ, (Aug 27, 2026)

By Brandi O. Brown, J.D.

This is the second settlement of this type by the DOJ under the Civil Rights Fraud Initiative.

The Justice Department this week announced that it had secured a settlement agreement with Deloitte whereby the firm has agreed to pay the United States $21.5 million in order to resolve allegations made by the Department, under the Trump administration’s Civil Rights Fraud Initiative, that it violated the False Claims Act by allegedly failing to comply with anti-discrimination requirements in its federal contracts and by discriminating against employees and applicants based on race or sex.

This is the second settlement under the initiative. In April, IBM agreed to pay over $17 million for False Claims Act claims based on its diversity hiring.

The Deloitte settlement resolves allegations that from 2017 to the present, Deloitte falsely certified compliance with conditions applicable to federal contracts relating to equal employment opportunity, while engaging in discriminatory race and sex-based employment practices.

“Government contractors cannot reward or penalize employees based on race or sex—and labeling the practice DEI does not make it lawful,” said Attorney General Todd Blanche. “The Justice Department will aggressively pursue government contractors that have used taxpayer dollars to fund unlawful discrimination.”

“Merit drives opportunity and promotion. Not someone’s sex or race,” said Associate Attorney General Stanley E. Woodward Jr. “Today’s settlement is yet another example of this Department’s commitment to eliminating woke, unconstitutional practices from American workplaces.”

Race and sex goals. Specifically, DOJ alleged that Deloitte took race or sex into account when making hiring, promotion, and staffing decisions, as part of its effort to achieve progress toward non-public race and sex-based workforce composition goals. DOJ alleges that business units within Deloitte received monthly summaries tracking demographic goals and assessing whether the goal was exceeded, met or slightly missed, or significantly below the goal. In addition, DOJ alleged that Deloitte’s Partners, Principals and Managing Directors (PPMDs) were evaluated, in part, based on their contributions to those workforce composition goals.

According to the federal government, these goals were also intended to impact Deloitte’s promotion decisions. For example, it contends that where the class of PPMD candidates initially met Deloitte’s demographic goals, Deloitte identified candidates by race and sex in a spreadsheet when circulating the list of candidates, and suggested the individuals involved in selecting the PPMD candidates promote specific employees to “equitably maintain the current mix.” It also alleged that Deloitte set goals pertaining to the demographics of employees staffed to federal contracts.

Finally, the government alleged that Deloitte offered certain opportunities, such as training, mentoring, leadership development programs, and educational opportunities, only to certain employees, with eligibility based on race or sex. These programs were designed to boost the career prospects of these individuals over others, DOJ contends.

The settlement resolves claims brought under the qui tam or whistleblower provisions of the False Claims Act by the American Alliance for Equal Rights. The qui tam case is captioned United States ex rel. American Alliance for Equal Rights v. Deloitte LLP, et al. (No. 4:25-cv-00458). Under the resolution, the Relator will receive $4,300,000.

Terms of the agreement. In exchange for the payment, the United States agreed to release Deloitte and a broad group of affiliated entities from civil and administrative monetary claims arising from the conduct covered by the agreement, including claims under the False Claims Act, the Program Fraud Civil Remedies Act, and common-law theories such as breach of contract, payment by mistake, unjust enrichment, and fraud. The relator likewise agreed to release Deloitte and related entities from claims connected to the covered conduct and the allegations in the lawsuit.

However, the agreement preserves several categories of government claims. The United States specifically retained any claims involving tax liability, criminal liability, administrative enforcement authorities such as suspension and debarment, Equal Employment Opportunity-related charges, conduct outside the defined covered conduct, obligations created by the settlement itself, and claims against individuals.

The settlement also contains mutual release provisions. Deloitte released any claims it might have against the United States arising from the covered conduct or the government’s investigation and prosecution of the matter, and separately released claims against the relator arising from the allegations and litigation. Deloitte additionally agreed not to assert constitutional defenses based on double jeopardy or excessive fines in any future criminal prosecution or administrative action related to the covered conduct.

There are also restrictions preventing Deloitte from charging settlement-related costs to the government.

Deloitte has denied all wrongdoing and does not admit liability.

Companies: Deloitte LLP; Deloitte Consulting LLP; Deloitte & Touche LLP; Deloitte Financial Advisory Services LLP; Deloitte Transactions and Business Analytics LLP

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