Deloitte agrees to pay $21.5 million to settle False Claim Act accusations

Sponsored by

I-9 in no time. I-9 fines have hit a new peak, costing $2.8k to $28.6k per error. Help free up your team and protect your organization from costly fines by streamlining Section 2 completions, digitizing your records, and keeping your onboarding audit-ready with Equifax.

Deloitte agreed to a $21.5 million settlement with the Department of Justice (DOJ) over claims that the company violated the False Claims Act.

The DOJ alleged Deloitte, a government contractor, committed fraud because of its DEI initiatives. It claimed, among other things, that the company took race and sex into account during hiring and promotions.

Deloitte did not admit to, and the government did not prove, any wrongdoing, but the settlement marks another win for the Trump administration in its ongoing efforts to eliminate DEI in the public and private sectors.

“The Justice Department will aggressively pursue government contractors that have used taxpayer dollars to fund unlawful discrimination,” Attorney General Todd Blanche said in a statement.

“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,” Jonathan Gandal, firm managing director at Deloitte, told HR Brew in an emailed statement.

The administration targeted Deloitte over efforts dating back to 2017. “The allegation is that even at that time, those practices were unlawful. Which means a lot of organizations are exposed,” David Glasgow, co-founder of the Meltzer Center for Diversity, Inclusion and Belonging at New York University School of Law, told HR Brew. “It’s one of many reasons why I don’t anticipate a sort of wild pendulum swing back in the other direction if the political environment shifts.”

The settlement is somewhat similar to the $17 million agreement that the DOJ made with IBM in April. The company settled government claims that it gave bonuses based on diversity progress, and had programs that gave preferential treatment based on race and sex, but did not admit to any unlawful activities, HR Brew reported.

“The pattern that I’m seeing is that organizations that are being pursued in this way under the False Claims Act—they’re federal contractors,” Glasgow said. “Whether these claims had any foundation to them that the DOJ is making, it’s a really strong incentive on these parties to just settle and move forward because the consequences of fighting the federal government, fighting the claims in court, are that this administration could punitively rip away contracts from entities that they don’t like.”

The administration’s targeting of companies under the Fair Claims Act is similar to how it targeted law firms with DEI programs, according to Glasgow. Most of those law firms backed away from DEI language, though Perkins Coie fought the claims in court.

“I just think we’re going to see many more of these settlements emerging over the next months and years.”