Deloitte has agreed to pay nearly $21.5 million to settle allegations that it defrauded the federal government by continuing to consider diversity when making hiring, promotion and staffing decisions.

It is the latest settlement stemming from investigations the Trump administration launched last year in a broad effort to root out diversity initiatives at major U.S. companies that contract with the federal government.

In a statement Tuesday, Associate Attorney General Stanley Woodward said the deal was another example of how the department was "eliminating woke, unconstitutional practices from American workplaces."

"Merit drives opportunity and promotion. Not someone's sex or race," he said.

In a statement, Deloitte said it was pleased to have resolved the matter "to avoid the cost and distraction of protracted litigation."

Many of the administration's civil probes have been proceeding under a novel use of the False Claims Act. The federal law, used most often in healthcare to police Medicare and Medicaid fraud, is designed to punish businesses that cheat the government by inflating the cost of services or billing for work that was never performed. Last year, the law raked in more than $6.8 billion in settlements and judgments, a single-year record for the Justice Department.

In the second Trump administration, the Justice Department has been operating under a new theory that federal contractors that consider diversity, equity and inclusion in their employment practices are also committing fraud under the law.

The Justice Department maintains companies have to certify, as a condition of their federal contract, that they won't discriminate against current or prospective employees based on their race, color, national origin or sex.

IBM was the first private-sector company to settle allegations that it violated the False Claims Act in this unprecedented way. The global technology company agreed in April to pay $17 million to resolve claims that it failed to comply with the antidiscrimination requirements when hiring, helping employees advance their careers and doling out bonuses.

Deloitte, an accounting and consulting giant, is accused of tracking diversity in its business units and setting demographic goals based on race and sex that affected hiring and promotion decisions.

Several companies have faced similar investigations, including Alphabet's Google and Verizon Communications, which received Justice Department demands for documents and information about their workplace programs, The Wall Street Journal previously reported.

The Trump administration has been working to penalize businesses that still have diversity programs on their books after Trump issued an executive order in January 2025 to effectively end what he called "dangerous, demeaning, and immoral race- and sex-based preferences."

PayPal agreed to give up $30 million in transaction fees in May to end a Justice Department investigation into its lending practices. The financial services company was accused of creating a discriminatory investment program that favored Black and minority-owned businesses. But in that case, the Justice Department alleged PayPal had violated the Equal Credit Opportunity Act. The law requires lenders to judge borrowers based only on their ability to repay a loan.