Deloitte to pay US$21.5m to settle DEI probe by Trump Administration

Yesterday (26 August), the US Department of Justice announced that Deloitte US has agreed to pay US$21.5 million to resolve allegations that the American arm of the Big Four Firm violated the False Claims Act, by failing to comply with anti-discrimination requirements in its federal contracts and discriminating against employees and applicants on the basis of their race or sex.

The Justice Department had alleged that took 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. Moreover, it contended that the partners, principals, and managing directors of Deloitte were evaluated, in part, based on their contributions to helping Deloitte achieve its workforce composition goals.

It further alleged that Deloitte set goals pertaining to the demographics of employees staffed to federal contracts, 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.”

In the past 18 months, the Trump Administration and Department of Justice have probed the diversity, equity, and inclusion (DEI) practices of corporations across the United States, including nearly two dozen large law firms, including some with offices in Australia, which has had reverberations for corporate commitments to DEI globally.

US Attorney-General Todd Blanche said: “Government contractors cannot reward or penalise employees based on race or sex — and labeling the practice DEI does not make it lawful.”

“The Justice Department will aggressively pursue government contractors that have used taxpayer dollars to fund unlawful discrimination,” he said.

Associate Attorney General Stanley E. Woodward Jr. added: “Merit drives opportunity and promotion. Not someone’s sex or race. Today’s settlement is yet another example of this Department’s commitment to eliminating woke, unconstitutional practices from American workplaces.”

Assistant Attorney General Brett A. Shumate, of the Justice Department’s Civil Division, said: “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.”

“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,” he said.

And US Attorney for the Northern District of Texas, Ryan Raybould, said: “As this settlement shows, the government is committed to ensuring that those who receive the benefits of federal contracts or funding must play by the rules.”

“The False Claims Act is a powerful tool for enforcing those obligations, and my office will not hesitate to use it to investigate and uncover any violations and to hold the responsible parties accountable,” he said.

This civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by the American Alliance for Equal Rights.

As reported by Reuters, Deloitte denies it engaged in ​discriminatory conduct and the ​settlement agreement released advised that the firm does not admit liability. The firm said, Reuters noted, that it was pleased to resolve the matter to "avoid the ​cost and distraction of protracted litigation".