- within Employment and HR topic(s)
WHAT YOU NEED TO KNOW:
- DOJ announced a $21.5 million False Claims Act settlement with Deloitte based on allegations that certain DEI initiatives violated federal anti-discrimination requirements for government contractors.
- DOJ’s allegations focused on demographic targets, DEI-linked performance metrics, and race- or sex-specific training and development opportunities.
- The settlement highlights DOJ’s continuing use of the False Claims Act to scrutinize DEI-related practices, following a similar settlement with IBM and DOJ’s Civil Rights Fraud Initiative.
On August 25, 2026, the US Department of Justice (DOJ) announced that Deloitte agreed to pay $21.5 million to resolve allegations under the False Claims Act (FCA) that certain of its diversity, equity and inclusion (DEI) initiatives violated federal anti-discrimination requirements applicable to government contractors. Deloitte denied the allegations, and the settlement does not include any admission of liability or wrongdoing.
Although the settlement does not establish that the challenged programs were unlawful, it offers a roadmap of the types of DEI-related practices that DOJ is focused on and thus pose enforcement risk. The targeted practices included allegations that:
- business units “received monthly summaries tracking the demographic goals within the unit, where representation or advancement towards the goal was highlighted in green, yellow or red depending on whether the goal was exceeded, met or slightly missed, or significantly below the goal”;
- performance evaluations were tied in part to progress toward workforce composition goals;
- the goals were intended to influence employment decisions; and
- certain training, mentoring, leadership-development programs, and educational opportunities were limited by race or sex.
The settlement is the latest example of the Administration’s effort to use the FCA to challenge DEI-related practices by federal contractors, following DOJ’s $17 million settlement with IBM in April 2026. The settlement also aligns with DOJ’s May 2025 announcement of a Civil Rights Fraud Initiative to use the FCA to target DEI activities. In particular, the settlement suggests a continued enforcement focus on demographic targets, DEI-linked performance metrics, and race- or sex-specific development opportunities.
The settlement includes the resolution of claims brought by a third-party relator, the American Alliance for Equal Rights (AAER), under the qui tam or whistleblower provisions of the FCA. AAER had filed a complaint on behalf of an anonymous whistleblower in the Northern District of Texas alleging that Deloitte had falsely certified compliance with anti-discrimination requirements in state and federal law. Under the settlement, AAER will receive $4.3 million.
In a separate settlement with the state of Indiana related to the same matter, Deloitte agreed to pay $1.2 million to resolve allegations that it violated anti-discrimination requirements in its work with the state.
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