The federal government continues to use False Claims Act (FCA) enforcement to target prominent companies with DEI programs. Previously, IBM faced a DEI FCA enforcement action that ended in a $17 million settlement. Now Deloitte is settling with the Department of Justice (DOJ) for $21.5 million. A recent WilmerHale memo dives into the implications of this settlement agreement:
“The settlement suggests a continued enforcement focus on demographic targets, DEI-linked performance metrics, and race- or sex-specific development opportunities.
The settlement includes the resolution of claims brought by a third-party relator, the American Alliance for Equal Rights (AAER), under the qui tam or whistleblower provisions of the FCA. AAER had filed a complaint on behalf of an anonymous whistleblower in the Northern District of Texas alleging that Deloitte had falsely certified compliance with anti-discrimination requirements in state and federal law. Under the settlement, AAER will receive $4.3 million.”
So which DEI programs are catching the most heat from the administration? The Deloitte settlement indicates that those actively tracking and incentivizing diversity targets are most at risk. The administration views any hiring or firing decision made on the basis of a protected characteristic as violating the Civil Rights Act. Even if those decisions are made to relieve historical inequities. However, metrics are still important. The old cliché “what gets measured gets managed” still holds.
To avoid DEI FCA enforcement actions, consider measuring ancillary metrics using employee engagement surveys. Feedback regarding your workforce’s culture and sense of inclusion will help you measure the benefits of DEI while avoiding quota-based systems targeted by the DOJ. Additionally, ensure that all DEI-related mentorship and leadership development programs are open to everyone and not limited by a protected characteristic.
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