The Justice Department has secured a $21.5 million False Claims Act resolution against Deloitte as a result of its Civil Rights Fraud Initiative. In this compliance alert, Affirmity Vice President of Sales, Kim Hendon, reviews the DoJ’s press release and explores what organizations need to do to avoid ending up in a similar situation as a result of the government’s pushback against DEI.
Summary
On August 25, 2026, the DOJ issued a press release announcing that Deloitte has agreed to pay $21.5 million to resolve allegations that it violated the False Claims Act by failing to comply with anti-discrimination requirements in its federal contracts. The settlement concerns “allegations that from 2017 to the present, Deloitte falsely certified compliance with these conditions, while engaging in discriminatory race and sex-based employment practices.”
Deloitte was accused of “taking race or sex into account when making hiring, promotion, and staffing decisions to achieve progress toward non-public race and sex-based workforce composition goals.”
Key elements of the case included allegations that:
- Deloitte’s business units received monthly summaries tracking demographic goals, wherein advancement was highlighted in green, yellow, or red depending on whether the goal was met, missed, or significantly missed.
- Deloitte’s Partners, Principals and Managing Directors (PPMDs) were partially evaluated against these demographic goals, and that for a two-year period the compensation of these PPMDs was tied to these goals.
- Deloitte set goals “and sought to make statistically equal the percentage of Deloitte-identified Under Represented Minorities (URMs) and non-URMs who were understaffed or “on the bench.”
- Deloitte offered training, mentoring, leadership development programs, educational opportunities or resources, and/or similar opportunities only to certain employees, with eligibility limited on the basis of race or sex. The organization’s Compass and Springboard mentorship programs were highlighted as examples.
The press release ends with a notice that “The claims resolved by the United States in the settlement are allegations only and there has been no determination of liability.”
Who Is Impacted and What Actions Are Required?
This action underscores the DOJ’s growing focus on using the False Claims Act to enforce federal contractors’ anti-discrimination obligations.
Federal contractors are required to certify compliance with laws prohibiting employment discrimination based on race, sex, and other protected characteristics. The DOJ has signaled that workforce initiatives, diversity programs, and employment practices that rely on protected characteristics may face heightened scrutiny, particularly when federal funds or contracts are involved.
Notably, the settlement was brought in part under the qui tam/whistleblower provisions of the False Claims Act by the American Alliance for Equal Rights, a nonprofit advocacy group founded by Edward Blum. Blum was a key figure in (among other things) Students for Fair Admissions v. Harvard, which ended race-based affirmative action in college admissions. This demonstrates the extent to which plaintiffs have the backing of activist groups working towards achieving legislative change—further increasing the risk involved.
It’s important to emphasize that several of the elements targeted in this action are not in themselves contrary to equal opportunity law. Affirmity’s position is that tracking demographic data is not only likely legally permissible within federal contracts, it’s also necessary when properly monitoring discrimination risk across all fronts and ensuring compliance with equal opportunity law. The issue in this case is the extent to which this data constituted a “goal” or “quota,” and whether reaching it was in turn tied to consequences for employees.
Similarly, employers should continue offering training, mentoring, leadership development programs, educational opportunities, or resources through employee engagement programs nominally representing certain demographic groups. These groups must, however, be open and accessible to all employees.
We encourage all federal contractors concerned about this case to work with legal counsel to determine where monitoring and employee engagement efforts could present an opening for legal action.
How Affirmity Can Help
Affirmity offers DEI Risk Assessment Services for organizations concerned about how their employee engagement efforts may conflict with the latest interpretations of federal non-discrimination law. We collaborate with your teams and legal counsel to conduct a full attorney-client DEI program assessment while providing comprehensive data analysis and recommendations.
Organizations must now focus on workforce data readiness, ensuring they are in a position to understand, monitor, and defend workforce decisions. Affirmity can also assist with:
- Workforce compliance services
- Workforce analysis software and services
- Compensation and pay equity analysis
Protect your organization from shifting agency priorities: Contact our team of experts today.
About the Author
Kim Hendon oversees account management and sales for Affirmity. She is responsible for building successful, long-term partnerships with clients and generating new business. Having served with the company for more than 25 years, Ms. Hendon has in-depth knowledge and broad experience in all areas of workforce analytics and HR compliance.
Ms. Hendon assists clients with the planning and development of workforce compliance and non-discrimination programs, as well as employee engagement initiatives. She holds a Bachelor of Arts in Speech Communication and a Master’s in Business Administration. Connect with her on LinkedIn.