While anti-ESG may be struggling in the courtroom, anti-DEI is thriving. The DOJ is racking up DEI-related settlements using the False Claims Act (FCA). The FCA requires federal contractors to warrant that they abide by civil rights laws. The EEOC is arguing that DEI programs discriminate based on protected characteristics, thus violating equal protection. So far, Deloitte faced a $20 million settlement, along with IBM, which paid out $18 million. Now Accenture joins their ranks, settling the government’s claim with a $25 million FCA settlement. A DOJ press release sums up some of the government’s allegations:
“The United States alleged that AFS took race or sex into account when making hiring decisions to achieve progress toward non-public workforce composition goals. Business unit leaders within AFS received monthly summaries of the specific percentage of each race and sex within the unit, with the figures highlighted green, yellow, or red to indicate whether representation was at or exceeded AFS’ goal, was within 5 percent of AFS’ goal, or was below 5 percent of AFS’ goal, respectively. These demographic goals were designed to, and did, drive changes in hiring practices based on race and sex. For example, at the end of 2020 and beginning of 2021, AFS engaged in a round of entry level employee hiring to make further progress towards the company’s racial representation goals.”
This $25 million FCA settlement further cements the DOJ’s strategy, and we’ll likely see more cases of this type over the next two years. It’s worth pointing out that the government is targeting companies with quotas. This was also the case in the Deloitte settlement as well. DEI programs are still valuable, but must be crafted with compliance at the top of mind. Diversity is a valuable asset, but in the current environment, targets cannot be set in clear-cut quota fashions. Instead, companies should work to foster inclusive cultures and bring about workforce diversity organically.
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