Deloitte to pay $21.5 mn to settle US workplace discrimination claims

Deloitte to pay $21.5 million to settle US government's allegations of race- and sex-based discrimination in hiring, promotions, staffing and employee programmes

Accounting and consulting major Deloitte has agreed to pay $21.5 million to settle a US government investigation into its diversity, equity and inclusion (DEI) practices.

 

The settlement is the latest reached under the False Claims Act through the US DOJ's Civil Rights Fraud Initiative, which was launched in May 2025, the US Department of Justice (DOJ) said in a news release on Tuesday (local time).

 

According to the department, Deloitte violated the False Claims Act by failing to comply with anti-discrimination requirements attached to its federal contracts and by discriminating against employees and applicants on the basis of race or sex. The settlement resolves allegations that, from 2017 to the present, Deloitte falsely certified that it was complying with these requirements while engaging in discriminatory, race- and sex-based employment practices.

 

 

What were the allegations against Deloitte?

 

The department alleged that Deloitte took race or sex into account in hiring, promotion and staffing decisions to make progress towards non-public, race- and sex-based workforce composition goals.

 

Business units within Deloitte received monthly summaries tracking progress towards demographic goals. Representation or progress towards those goals was highlighted in green, yellow or red, depending on whether a goal was exceeded, met or slightly missed, or was significantly below target.

 

The US government also alleged that Deloitte's Partners, Principals and Managing Directors (PPMDs) were evaluated, in part, on their contribution towards achieving the firm's workforce composition goals. For two years, the compensation of approximately 150 of Deloitte's most senior PPMDs could also be affected if their business units failed to meet demographic goals set by the company.

 

The department further alleged that the demographic goals were intended to influence Deloitte's promotion decisions, with business units assigned targets for the racial and sex composition of their annual PPMD classes. For example, where a class of PPMD candidates initially met Deloitte's demographic goals, the company allegedly identified candidates by race and sex in a spreadsheet while circulating the list. According to the department, those involved in selecting PPMD candidates were then encouraged to promote specific employees to maintain the existing demographic mix.

 

What did the government allege about staffing?

 

The US government further alleged that Deloitte set demographic goals for employees staffed on federal contracts.

 

According to the allegations, the firm sought to make statistically equal the proportion of Deloitte-identified Underrepresented Minorities (URMs) and non-URMs who were understaffed or on the bench. Deloitte allegedly identified employees available to be staffed on projects by race and sex and provided their names to staffing managers.

 

The managers were then allegedly encouraged to consider staffing employees whose utilisation would help Deloitte achieve parity between the percentages of URMs and non-URMs who were understaffed or on the bench.

 

It was also alleged that Deloitte offered certain training, mentoring, leadership development programmes, educational opportunities, resources, and similar opportunities only to certain employees, with eligibility restricted based on race or sex. According to the allegations, the programmes were designed to improve the career prospects of eligible employees through sponsorship and networking opportunities.

 

How did Deloitte respond?

 

While Deloitte has denied the claims, it has agreed to pay $10 million in restitution and another $11.5 million to settle the matter. A spokesperson for the company said: "We are pleased to have resolved this matter to avoid the cost and distraction of protracted litigation, allowing us to remain focused on attracting and developing exceptional talent with the skills and capabilities our clients rely on every day", reported the Financial Times.

 

US companies face growing scrutiny over DEI practices

 

The settlement under the False Claims Act comes three months after Deloitte rival IBM agreed to pay $17.1 million to settle similar allegations. US companies have faced growing scrutiny of their DEI practices during US President Donald Trump's second term in office.

 

Reacting to the settlement, US Attorney General Todd Blanche said government contractors cannot reward or penalise employees based on race or sex, and that calling such practices DEI does not make them lawful. "The Justice Department will aggressively pursue government contractors that have used taxpayer dollars to fund unlawful discrimination," Blanche said.