Deloitte will pay the US government $21.5 million to settle claims that its diversity, equity, and inclusion practices were discriminatory and violated federal contracting laws under the Trump administration’s crackdown on corporate DEI initiatives. The firm set race- and sex-based workforce goals and tied partner remuneration to achieving them, despite public promises of non-discrimination in hiring and promotions. Deloitte denied the allegations but agreed to pay $10 million in restitution and $11.5 million to resolve the matter.

The settlement arises from a False Claims Act investigation, with the Justice Department asserting that DEI-related costs were improperly passed to the government through higher fees. US Attorney-General Todd Blanche stated that government contractors cannot reward or penalize employees based on race or sex, regardless of labeling such practices as DEI. The case follows a similar $17.1 million settlement by IBM three months prior.

Deloitte has since discontinued its annual DEI transparency reports, which previously outlined goals to increase Black, Hispanic, and female representation. The American Alliance for Equal Rights, founded by Edward Blum, will receive $4.3 million from the settlement. Blum previously led efforts to end race-conscious university admissions and sued Deloitte on behalf of the government.

Internal documents showed monthly tracking of demographic goals and partial basis of partner evaluations on DEI progress, affecting about 150 senior figures. Deloitte emphasized the settlement avoids litigation costs and allows focus on talent development, while maintaining it did not admit liability.