Global professional services firm Deloitte has agreed to pay $21.5 million to the United States government in a case involving allegations of discriminating against employees and applicants based on race or sex, the Department of Justice said on Tuesday.

A DOJ statement said Deloitte and its subsidiaries—Deloitte LLP, Deloitte Consulting LLP, Deloitte & Touche LLP, Deloitte Financial Advisory Services LLP, and Deloitte Transactions and Business Analytics LLP—allegedly violated the False Claims Act by falsely certifying their compliance with federal anti-discrimination requirements.

“The settlement resolves allegations from 2017 to the present. Deloitte falsely certified compliance with these conditions, while engaging in discriminatory race and sex-based employment practices,” the statement said. 

Deloitte was accused of considering employees’ race or sex when making hiring, promotion and staffing decisions to meet internal workforce targets.

According to the Justice Department, Deloitte business units tracked monthly demographic goals, marking summaries with green, yellow or red to indicate whether targets were met, slightly missed or significantly below target. 

It also alleged that the firm evaluated Deloitte’s partners, principals and managing directors (PPMDs) based in part on their contributions to achieving workforce goals.

The U.S. government said the compensation of about 150 senior PPMDs could be affected if their business units failed to meet the targets.

The government alleged that Deloitte set race and sex-based targets for annual PPMD promotion classes and considered candidates based on those workforce goals.

According to the government, the firm also set goals for employees assigned to federal projects, with the aim of achieving equal percentages of underrepresented minorities (URMs) and non-URMs who were understaffed or “on the bench.”

It said that Deloitte, after identifying employees to be staffed on projects by race and sex, forwarded their names to managers and also suggested that employees whose utilisation would help the firm achieve parity between URMs and non-URMs be staffed.

“The United States alleged that Deloitte offered certain training, mentoring, leadership development programmes, educational opportunities or resources, and/or similar opportunities only to certain employees, with eligibility limited on the basis of race or sex,” it said.

The government cited the Springboard and Compass programmes, which were designed to boost individuals’ careers, but said Deloitte limited eligibility based on race and sex through sponsorship and networking.

“Government contractors cannot reward or penalise 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.”

Associate Attorney General Stanley E. Woodward Jr. Said, “Merit drives opportunity and promotion. Not someone’s sex or race,” adding, “Today’s settlement is yet another example of this Department’s commitment to eliminating woke, unconstitutional practices from American workplaces.”

“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,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. 

The agreement follows a lawsuit by the American Alliance for Equal Rights against Deloitte under the whistleblower provisions of the False Claims Act. Under the settlement, the non-profit organisation will receive $4.3 million.