Financial Powerhouse Deloitte Pays $21.5 Million to Settle Alleged Employment Discrimination Violations

In August of this year, the financial powerhouse Deloitte has agreed to pay the federal government $21.5 million to settle allegations that Deloitte violated the federal False Claims Act. Federal contractors (companies who contract with the federal government) sign federal contracts that require the contractors to provide equal opportunities to employees and all applicants for employment. These means that, by signing these federal contracts, the contractors agree to not discriminate against employees and applicants for employment on the basis of their race or sex. The federal government alleged that Deloitte falsely certified that it was in compliance with the federal equal opportunities requirement while simultaneously discriminating against employees and applicants on the base of race and sex through its own employment policies, programs, practices, and decisions.

The federal government is sending a clear message: if you receive taxpayer dollars through federal contracts, you must not engage in any discrimination on the basis of sex or race. Assistant Attorney General Brett A. Shumate explained that “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.” In fact, Attorney General Todd Blanche stated more bluntly that “Government contractors cannot reward or penalize employees based on race or sex – and labeling the practice DEI (Diversity, Equity, Inclusion) does not make it lawful.” Clearly, employers looking to procure coveted government contracts need to scrutinize their own Diversity, Equity, and Inclusion programs to ensure they are not violating the False Claims Act, as the penalty for doing so can be quite hefty.

Employers need to be aware of what types of practices Deloitte engaged in that caught the eye of the federal government. First, the federal government alleges that Deloitte had goals regarding how many people of a certain race or certain sex they wanted within their workforce, and the government alleges Deloitte had hiring, promotion, and staffing practices that helped them achieve this demographic goal. In addition, the government alleges that different groups within Deloitte would receive a summary every month which tracked this demographic goal and the summary was color-coded with red, yellow, or green depending on whether that group exceeded, met, or fell below its demographic goal. The government alleges that even partners, principals, and managing directors received compensation based on whether or not the groups they managed met their demographic goals. Government allegations claim that promotions to partner, principal, or managing director at Deloitte were determined based on race and sex, and promotion decisions were made in order to “equitably maintain the current mix.” Finally, the government alleges that Deloitte offered training programs, mentoring programs, leadership development programs, educational opportunities or resources, networking, and other similar programs meant to boost an individual’s career prospects to certain individuals based on their race or sex. Clearly, the government allegations show Deloitte had created various employment programs, policies, and decisions that relied heavily on race or sex.

Employers have to be aware that the federal government is now using the False Claims Act to catch employers who are discriminating on the basis of race or sex. Employers who have federal contracts or have been trying to obtain federal contracts need to audit and scrutinize their own DEI practices to ensure they are in compliance with the federal requirement of equal opportunities for all employees and applications for employment.