September 8, 2026

By: Mark T. Sottile , Scott A. Coffina

If you’re a regular reader of our firm’s blogs, you might recall our April 23, 2026, article on a $17 million settlement concerning allegations that IBM’s diversity practices violated the False Claims Act. More recently, on August 25^th, the Department of Justice announced another False Claims Act resolution, with Deloitte LLP, Deloitte Consulting LLP, Deloitte & Touche LLP, Deloitte Financial Advisory Services LLP, and Deloitte Transactions and Business Analytics LLP, for failing to comply with anti-discrimination requirements in its federal contracts and discriminating against employees and applicants on the basis of their race and sex. Deloitte has agreed to pay $21.5 million.

The case centers on a provision embedded in most federal contracts, which requires contractors to provide equal opportunity to employees and applicants for employment in terms of hiring, job promotions, salary increases, and other material actions. According to an August 25^th  DOJ press release, the multinational professional services firm monitored diversity metrics across its business units, set race and sex based demographic goals, and illegally altered hiring and promotion decisions to meet them.

The Deloitte settlement addresses allegations that from 2017 to the present, the firm engaged in race and sex discrimination, while simultaneously certifying in its federal contracts that it would comply with anti-discrimination requirements. “Federal contractors are bound by clear legal obligations: they must certify that they will make employment decisions without regard to race or sex, and they must honor that commitment — not circumvent it through demographic targets or programs that allocate opportunities based on protected characteristics,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “When a contractor misrepresents its compliance with federal anti-discrimination law to secure federal funds, it violates the conditions for receiving those funds and risks liability under the False Claims Act. Today’s resolution makes unmistakably clear that the Department will aggressively enforce these requirements, and companies who take taxpayer funds while engaging in illegal discrimination will be held accountable.”

Deloitte allegedly tracked business units’ demographics through monthly color-coded summaries, as discussed in the DOJ press release. Management was then evaluated partly on their contributions to these demographic goals, with compensation for roughly 150 senior leaders hinging in part on whether business units met the objectives.

Deloitte denied any wrongdoing while settling the government’s claims.

This particular civil settlement resolved claims under the qui tam or whistleblower provisions of the False Claims Act. Through the False Claims Act, a private party, or Relator, can file an action on behalf of the United States and receive a percentage of the recovery. Here, the American Alliance for Equal Rights, which according to its website is dedicated to challenging distinctions made on the basis of race and ethnicity in the state and federal courts, brought the suit against Deloitte in the United States District Court for the Northern District of Texas. The nonprofit membership organization is set to receive upwards of four million dollars as part of the settlement.

The DOJ continues to use the False Claims Act to target diversity, equity, and inclusion programs at major U.S. corporations, which contract with the federal government.

For more information on what employers can do to avoid similar lawsuits, please check out our firm’s April 23, 2026, blog post “$17 Million False Claims Act Settlement is Cautionary Tale for Federal Contractors with Diversity Initiatives.”