Deloitte has agreed to pay nearly $21.5 million to settle allegations that it defrauded the federal government by considering diversity in hiring, promotion, and staffing decisions. The settlement is the latest stemming from investigations the Trump administration launched last year to root out diversity initiatives at major U.S. federal contractors. Associate Attorney General Stanley Woodward stated the deal exemplifies the department "eliminating woke, unconstitutional practices from American workplaces," adding, "Merit drives opportunity and promotion. Not someone's sex or race." Deloitte said it resolved the matter "to avoid the cost and distraction of protracted litigation" and denied liability.

The probes rely on a novel use of the False Claims Act, which typically targets healthcare fraud and brought in a record $6.8 billion last year. The Justice Department argues that federal contractors certify they won't discriminate based on race, color, national origin, or sex, and that considering DEI violates this certification. IBM was the first to settle under this theory, paying $17 million in April. Deloitte is accused of tracking diversity and setting demographic goals based on race and sex. Other companies facing similar investigations include Alphabet's Google and Verizon Communications. The administration is acting under a January 2025 executive order to end "dangerous, demeaning, and immoral race- and sex-based preferences." Separately, Pay Pal agreed to forgo $30 million in fees in May over a lending program favoring minority-owned businesses, alleged to violate the Equal Credit Opportunity Act.