Deloitte has agreed to pay $21.5 million to settle a lawsuit alleging it defrauded the federal government by incorporating race and sex considerations in hiring, promotion, and staffing decisions. According to an August 25, 2026, statement from the U.S. Department of Justice, Deloitte monitored its business units’ diversity progress through monthly reports and linked senior leaders’ compensation to meeting demographic goals. Although Deloitte denied the allegations and admitted no liability, the settlement reflects heightened scrutiny over diversity, equity, and inclusion (DEI) initiatives in federal contracting.

This case is part of the Trump administration’s ongoing campaign to roll back DEI programs at companies doing business with the federal government. The administration’s Justice Department has used the False Claims Act to target organizations it claims misrepresent compliance with anti-discrimination laws by factoring in race and sex in workforce decisions. Assistant Attorney General Brett A. Shumate emphasized the department's commitment to penalizing corporations that use federal funds while engaging in what they deem illegal discrimination.

Deloitte is not alone in facing such allegations under this approach. Earlier in 2026, IBM settled for $17 million over similar claims that it employed DEI practices in employment actions, including setting demographic targets and limiting certain development opportunities to specific groups. PayPal also settled with the Justice Department by relinquishing $30 million in transaction fees amid accusations that its Economic Opportunity Fund, designed to support Black and minority-owned businesses, violated federal civil rights laws through discriminatory lending practices.

These enforcement actions signal a significant shift in how DEI initiatives are viewed in federal contracting and business compliance. The Trump administration’s stance makes it clear that companies found to be using race or sex as factors in employment or business decisions tied to federal funds risk substantial legal and financial repercussions. For firms like Deloitte, IBM, and PayPal, navigating this evolving legal landscape requires careful alignment of inclusion efforts with prevailing regulatory interpretations.