Deloitte to pay US govt $21.5 mn to settle ‘discriminatory’ practices claims, months after IBM agreed to pay $17 mn

Accounting and consulting giant Deloitte is reportedly going to pay the US President Donald Trump's administration $21.5 million to settle claims over its discriminatory diversity practices and violations of federal contracting laws.

The Department of Justice (DOJ) reported the development in a news release on Tuesday (local time), saying it had reached another settlement under the False Claims Act through its Civil Rights Fraud Initiative, which was launched in May 2025. Deloitte agreed to pay the amount to resolve allegations that it violated the False Claims Act by failing to meet anti-discrimination requirements in federal contracts and discriminating against employees and job applicants based on race or sex.

It further said that federal contracts generally require companies to provide equal employment opportunities to both workers and job applicants. Contractors must certify that they will not discriminate based on race or sex and will take measures to ensure applicants are hired and employees are treated “without regard to” race or sex. The settlement addresses allegations that Deloitte falsely certified its compliance with these requirements from 2017 onward while engaging in employment practices based on race and sex.

Here's what the US government alleged

According to the release, the Trump administration alleged that Deloitte took race or sex into account when it made 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 the demographic goals, with performance marked in green, yellow, or red based on whether a goal was exceeded, met, narrowly missed, or fell significantly short.

It further alleged that Deloitte assessed its Partners, Principals, and Managing Directors (PPMDs), in part, on their contributions to meeting these workforce targets. For two years, the compensation of around 150 of Deloitte's most senior PPMDs could also be affected if their respective business units failed to meet the company's demographic goals.

Another allegation was that Deloitte's workforce targets influenced promotion decisions, with business units given yearly goals for the racial and sex composition of their PPMD classes. The DOJ cited an example in which a PPMD candidate class initially met Deloitte's demographic targets. When the list of candidates was circulated, Deloitte identified them by race and sex in a spreadsheet and suggested that those selecting PPMD candidates promote certain employees to “equitably maintain the current mix.”

The Justice Department also argued that Deloitte's diversity, equity and inclusion (DEI) efforts increased the company's costs, which were ultimately passed on to the government through higher fees.

According to a Financial Times report, the settlement comes as the Trump administration continues its crackdown on companies over their hiring practices.

Deloitte's response to the US government's claims

The Financial Times reported that, while Deloitte denies these claims, it agreed to pay $10 million in restitution and an additional $11.5 million to settle the matter. The firm is one of the largest consultants to the US government, and its contracts require it to comply with anti-discrimination practices.

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.”

However, Deloitte's decision to settle under the False Claims Act comes roughly three months after its rival IBM agreed to pay $17.1 million to settle similar allegations.

US companies facing backlash over DEI policies

US companies are reportedly facing intense backlash against DEI practices during US President Donald Trump's second term, leading many to scale back public commitments and downplay previous initiatives.

Deloitte has stopped publishing its annual DEI transparency report, in which it clearly stated goals to increase the proportion of Black and Hispanic staff and women in its workforce.

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