Link to Key Takeaways Key Takeaways
- DEI scrutiny is occurring at both the state and federal levels. The Starbucks settlement shows that state attorneys general are also scrutinizing employment and corporate governance practices involving race- or sex-based goals, preferences, and participation requirements.
- Federal contractors face additional FCA risk. Recent DOJ settlements involving Accenture, Deloitte, and IBM show that alleged violations of anti-discrimination requirements can become False Claims Act (FCA) matters when contractors certify compliance with applicable contractual obligations.
- Companies should review how DEI goals operate in practice. Particular attention should be given to workforce targets, hiring and promotion decisions, executive compensation, mentorship and leadership programs, supplier-diversity initiatives, and other programs that may condition opportunities or benefits on protected characteristics.
State and federal enforcement authorities continue to scrutinize corporate diversity, equity, and inclusion (DEI) programs, with a new settlement between Starbucks Corporation and the Florida Attorney General providing the latest example.
On September 17, Florida Attorney General James Uthmeier announced that Starbucks agreed to pay $1 million and undertake several commitments to resolve a lawsuit alleging that Starbucks engaged in employment practices that violated the Florida Civil Rights Act through race- and sex-based goals, quotas, and preferences. The settlement comes amid increased federal enforcement involving similar practices, including recent FCA settlements involving federal contractors Accenture, Deloitte, and IBM.
Link to Florida Challenges Starbucks’ Employment and DEI Practices Florida Challenges Starbucks’ Employment and DEI Practices
The Florida Attorney General filed suit against Starbucks in December 2025, alleging that the company had used race- and sex-based preferences in its employment practices. According to the complaint, Starbucks had established demographic goals for its workforce, tied portions of executive compensation to diversity objectives, and offered certain mentorship and professional-development opportunities based on race or sex.
Among other things, the state pointed to Starbucks’ previously announced goals of achieving at least 30% representation by “people of color” in corporate positions and at least 40% representation in retail and distribution center positions by 2025. Starbucks’ own 2023 Global Impact Report identified those representation goals for several categories of employees.
The Attorney General alleged that these practices violated the Florida Civil Rights Act, which prohibits employment discrimination based on protected characteristics including race and sex. The allegations were not adjudicated, and Starbucks denied wrongdoing.
Link to Starbucks Agrees to Nationwide Compliance Commitments Starbucks Agrees to Nationwide Compliance Commitments
Under the negotiated resolution, Starbucks agreed to comply with the Florida Civil Rights Act and not use race- or sex-based goals, quotas, or preferences in areas including hiring, promotion, compensation, executive compensation, mentorship programs, supplier selection, and board composition. Starbucks also agreed that it will not participate in organizations that require increasing the racial diversity of its board of directors. According to a spokesperson for the Attorney General’s Office, the agreement applies to Starbucks’ operations nationwide.
The settlement also includes a continuing compliance component. Starbucks’ Chief Legal Officer must submit annual certifications of compliance for four years, and the company will pay $1 million to the Florida Department of Legal Affairs to reimburse the state for costs associated with the litigation.
Importantly, the agreement contains no admission of liability or wrongdoing. Starbucks has also reportedly stated that the agreement does not require changes to its current programs or practices.
Link to Federal Contractors Face FCA, State, and Whistleblower Exposure Federal Contractors Face FCA, State, and Whistleblower Exposure
Although Starbucks is not resolving an FCA case, the settlement is particularly notable for federal contractors because the employment practices challenged by Florida overlap with practices DOJ has recently targeted through its Civil Rights Fraud Initiative.
On September 14, DOJ announced a $25 million settlement with Accenture resolving allegations that Accenture Federal Services falsely certified compliance with federal contractual anti-discrimination requirements while using race or sex in certain employment decisions. As we discussed in our recent post on the Accenture settlement, DOJ specifically alleged that the company used internal workforce composition goals and maintained training, mentoring, leadership-development, and educational programs for which participation was restricted based on race or sex.
That settlement followed a $21.5 million resolution with Deloitte in August involving similar allegations that Deloitte failed to comply with anti-discrimination requirements incorporated into its federal contracts while certifying compliance with those requirements. As we discussed in our post on the Deloitte settlement, the matter also demonstrates that potential exposure extends beyond federal FCA enforcement. Deloitte separately agreed to pay Florida and Indiana $1.2 million each to resolve parallel allegations under the states’ respective false claims laws. The underlying action was also brought as a qui tam lawsuit by the American Alliance for Equal Rights, which asserted claims on behalf of the federal government, Florida, and Indiana and received $4.78 million as its relator’s share of the federal and state settlements.
Earlier this year, IBM agreed to pay more than $17 million to resolve FCA allegations involving its DEI practices, including allegations concerning demographic goals, diverse interview slates, compensation incentives, and certain race- or sex-restricted employee programs.
Together, these actions demonstrate the multiple avenues through which DEI-related employment practices may face scrutiny. Private employers may face direct enforcement under federal or state anti-discrimination laws, as illustrated by Starbucks, while federal and state contractors can face additional false claims exposure when contractual certifications incorporate anti-discrimination requirements. The Deloitte matter further demonstrates that such allegations may originate through private whistleblowers using federal or state qui tam provisions, rather than solely through government-initiated investigations.
Link to What Companies and Federal Contractors Should Review What Companies and Federal Contractors Should Review
Federal contractors should continue reviewing DEI and employment programs with particular attention to whether protected characteristics play a role in actual employment decisions or access to workplace opportunities. Areas warranting review include numerical workforce targets, hiring and promotion processes, executive compensation tied to demographic outcomes, internship and mentorship programs, leadership-development opportunities, supplier-diversity programs, and representations or certifications made to the government concerning compliance with anti-discrimination requirements.
Not every diversity or inclusion initiative is necessarily unlawful. Programs focused on outreach, equal access, employee development, and creating a broadly inclusive workplace may present different legal issues than programs that use race, sex, or another protected characteristic to determine who receives an employment opportunity or benefit. But the Starbucks settlement, viewed alongside DOJ’s recent contractor settlements, shows that enforcement authorities are closely examining where employers draw that line.
For federal contractors in particular, the consequences may extend beyond traditional employment-law exposure. As DOJ’s recent FCA resolutions demonstrate, an alleged discriminatory employment practice can become a government contracts compliance issue when the contractor has certified compliance with contractual anti-discrimination requirements.
Please contact the authors if you have any questions.