Deloitte to pay $21.5 million to end Trump administration DEI probe

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Deloitte has agreed to pay $21.5 million to settle claims by the Trump administration that it discriminated against employees and job applicants on the basis of race or sex.The settlement is part of a wide-ranging Justice Department probe of the diversity, equity and inclusion initiatives of major companies with federal contracts. The Trump administration is investigating the DEI initiatives under the False Claims Act, a federal law used to take action against contractors suspected of defrauding the government.In April, IBM agreed to pay $17 million to resolve claims its DEI programs violated the False Claims Act. It was the first such settlement since the Justice Department established a task force last year to crack down on DEI using ‌anti-fraud law.Deloitte denied it engaged in the conduct alleged by the government and did not admit liability as part of the settlement. "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," Deloitte told USA TODAY in a statement. Federal contracts require contractors to provide equal opportunity in the workplace and companies must certify they don’t discriminate on the basis of race or sex. In the Deloitte case, the government alleged the company – one of the Big Four accounting firms – took race or sex into account when making hiring, promotion and staffing decisions. Business units received monthly summaries tracking demographic goals and Deloitte managers were evaluated in their contributions in reaching those goals, the DOJ said. In addition, Deloitte limited participation in certain training, mentorship, leadership development, and educational opportunities to employees of a certain sex or race, it said."Government contractors cannot reward or penalize employees based on race or sex – and labeling the practice DEI does not make it lawful," Attorney General Todd Blanche said in a statement. "The Justice Department will aggressively pursue government contractors that have used taxpayer dollars to fund unlawful discrimination."A joint effort with the U.S. Attorney’s Office for the Northern District of Texas, the settlement means anti-affirmative action activist Edward Blum’s Alliance for Equal Rights, the group that was a whistleblower in the case, will receive a $4.3 million payout. Earlier this year, the DOJ said it had seen a "rapid increase" in whistleblower complaints. A Justice Department bounty program gives tipsters a cut of the proceeds in False Claims Act cases."The Alliance brought this case on behalf of its members," Blum said in a statement. "The comprehensive settlement agreements reached by the United States, Florida, and Indiana speak for themselves."Separately, Indiana Attorney General Todd Rokita announced that Deloitte would pay $1.2 million to settle allegations it engaged in unlawful DEI practices as a state contractor. Pressures on employers to overhaul staffing, promotion practicesJust hours after he took the oath of office, President Donald Trump issued executive orders to dismantle diversity programs and directed federal contractors to end "illegal DEI discrimination." Fearing lawsuits and the loss of government contracts, dozens of the nation’s largest companies, from McDonald’s to Facebook owner Meta, rolled back or eliminated DEI programs.In May 2025, the DOJ signaled its intention to investigate federal contractors and grant recipients by creating the "Civil Rights Fraud Initiative," which threatens legal action under the False Claims Act.Government scrutiny has only intensified since then as the Trump administration increases pressure on employers to overhaul their staffing and promotion practices to align with the president’s political agenda.Damages and penalties can quickly add up in False Claims Act lawsuits, lawyers previously told USA TODAY. Defendants are at risk of being held liable for three times the damages the government alleges.What’s more, the DOJ has encouraged whistleblowers to file DEI lawsuits on the government’s behalf and potentially receive a portion of the windfall. Just the mere threat of a False Claims Act investigation is a powerful cudgel, lawyers have said. And becoming a target of the Trump administration carries significant business risks, from reputational damage to shareholder class action lawsuits.