Yesterday the Department of Justice announced a False Claims Act resolution with Deloitte, who have agreed to pay the United States $21.5 million to resolve allegations that they violated the act “by failing to comply with anti-discrimination requirements in its federal contracts and discriminating against employees and applicants on the basis of their race or sex.” It’s important to acknowledge that the settlement is not an admission of liability by Deloitte and they deny the allegations.
The 18-page settlement agreement, which is embedded in full at the bottom of this article, details the government’s beef:
Taking race or sex into account when making hiring, promotion, and staffing decisions to achieve progress towards non-public race and sex-based workforce composition goals for business units. Employees sometimes described the business unit goals as ”aggressive,” and certain managers were asked to ‘ ‘make[] a commitment” to achieve the goals. These goals were established to “demonstrate [Deloitte’s] commitment to putting [Black and Hispanic/Latinx] cohorts first,” and in some instances, Deloitte recognized that the goals, if achieved, would result in a reduction in the representation ofcertain other racial groups. Business units within Deloitte received monthly summaries tracking the demographic goals within the unit, where representation or advancement towards the goal was highlighted in green, yellow, or red depending on whether the goal was exceeded, met or slightly missed, or significantly below the goal.
Deloitte’s Partners, Principals and Managing Directors (PPMDs) were evaluated, in part, based on their contributions to helping Deloitte achieve its workforce composition goals, while, for a two year period, approximately 150 of Deloitte’s most senior PPMDs’ compensation could be impacted if their business units did not meet the demographic goals set by Deloitte. These PPMDs stood to lose tens of thousands of dollars per year based on whether their business units hit the demographic thresholds Deloitte set for them.
In evaluating themselves against Deloitte’s demographic goals during the year end evaluation and compensation process, some PPMDs cited as evidence of their high level performance, among other factors, ”increas[ing] the total number of Black professionals by at least 11 and Hispanic/Latinx professions by at least 31 in the West region,” reaching “45 percent female experienced hires,” or achieving “100% female MD promotes.”
There’s also a bit in there about taking race and sex into account when trying to shuffle people off the bench:
Deloitte set goals pertaining to the demographics of employees staffed to federal contracts, and sought to make statistically equal the percentage of Deloitte identified Under Represented Minorities (URMs) and non-URMs who were understaffed or ‘·on the bench.” Via the Priority Staffing Report, Deloitte identified employees by race and sex that were available to be staffed on projects and provided names of those employees to staffing managers and suggested that the managers consider staffing those employees, whose utilization would help Deloitte achieve its goal of achieving parity between the percentage of URMs and non-URMs who were understaffed or ..on the bench.” Deloitte considered addressing underutilization of certain demographics as a “lever” to use to achieve its aspirational demographic goals and used it to reduce the differential between URMs and non-URMs staffed to federal contracts.
The government contends these practices were in violation anti-discrimination requirements set forth in Title VII of the Civil Rights Act of 1964, rules Deloitte is obligated to follow as a federal contractor.
According to the settlement, once Deloitte pays up the government will then pay $4,300,000 of that to the American Alliance for Equal Rights, who filed the original complaint on behalf of a whistleblower.
“Government contractors cannot reward or penalize employees based on race or sex — and labeling the practice DEI does not make it lawful,” said Attorney General Todd Blanche. “The Justice Department will aggressively pursue government contractors that have used taxpayer dollars to fund unlawful discrimination.”
“Merit drives opportunity and promotion. Not someone’s sex or race,” said Associate Attorney General Stanley E. Woodward Jr. “Today’s settlement is yet another example of this Department’s commitment to eliminating woke, unconstitutional practices from American workplaces.”
Also this week, Indiana Attorney General Todd Rokita announced a separate but related $1.2 million settlement with Deloitte, evidently the first of its kind between a state and a government contractor if the press release is to be believed. So we’re up to $22.7 million if you’re doing math at home. “There is no justification for unlawful discrimination, even when a business claims good intentions or cloaks its practices in the language of DEI,” he said. “Treating people differently in the workplace based on race or sex is destructive and illegal. Companies that do business with the State explicitly pledge not to engage in it. We will continue to vigorously enforce Indiana’s False Claims and Whistleblower Protection Act and work to eliminate illegal DEI discrimination in all its forms.”
A case was also settled in Florida for another $1.2 million, bringing us to a grand total of $23,900,000 out of Deloitte’s pocket. As relator (here, will save you a Google on what that is), the American Alliance for Equal Rights will receive $4,780,000.
