Short answer: Lockheed Martin agreed to pay about $29.5 million to resolve federal claims that its DEI-linked pay, hiring, promotion and mentoring practices considered race and sex. The case shows that Title VII protects every employee, including white and male workers bringing what are often called "reverse discrimination" claims, and that federal contractors face added False Claims Act risk when they certify compliance.
On November 4, 2026, the Department of Justice and the EEOC announced a two-part settlement with Lockheed Martin. The EEOC calls it the largest class of workers to publicly recover in a settlement tied to a DEI program. For HR leaders, the case is less about whether to value inclusion and more about how programs are built, measured and rewarded.
Key takeaways
- Race- and sex-conscious decisions are unlawful under Title VII no matter the label. Calling a practice "diversity" does not protect it.
- Pay programs are a major risk. Adjusting bonus or merit lists to clear demographic "flags" was at the center of the case.
- Manager scorecards tied to demographic outcomes can turn goals into decisions.
- Mentoring and leadership programs must be open to everyone. Eligibility based on race or sex is a Title VII problem.
- Federal contractors face a second layer of risk. A false certification of nondiscrimination can trigger False Claims Act liability, triple damages and whistleblower suits.
- DEI is not the same as affirmative action. Some contractors are still legally required to run affirmative action programs for people with disabilities and protected veterans.
- Political change may shift priorities, not the law. Title VII applies regardless of who controls Congress, and private plaintiffs can sue on their own.
What happened in the Lockheed Martin EEOC settlement?
The settlement has two parts: a False Claims Act resolution with the Department of Justice and a Title VII agreement with the EEOC. Lockheed cooperated, and the government's claims are allegations only, with no finding of liability (EEOC press release).
| Part | Agency and law | Amount | Who benefits |
|---|---|---|---|
| False Claims Act settlement | DOJ, False Claims Act | $22 million | The United States |
| Whistleblower share | DOJ, qui tam provisions | $4.4 million | Tim Booher, a former Lockheed vice president who filed the qui tam suit (whistleblower shares are normally paid out of the government's recovery) |
| Title VII settlement agreement | EEOC, Commissioner's Charge under Title VII | About $7.5 million | More than 1,000 current and former employees |
What the government alleged
The "Comp Adder" pay program. Starting in 2021, Lockheed gave extra pay increases to the top 20% of employees in each business area. The government alleged HR pressured leaders to add or remove people based on race to clear statistical "flags."
Non-public race and sex goals used in hiring and promotion decisions, including 2023 "aspirational plus" goals.
Executive bonus metrics tied to demographic goals for women and minorities, tracked with color-coded status.
Development programs, such as an executive leadership diversity mentoring program, allegedly offered based on race or sex.
False certifications. From 2019 forward, Lockheed allegedly certified compliance with federal nondiscrimination rules while running these practices.
Wasn't Lockheed required to set race and sex goals?
Yes, for most of the period at issue. The alleged conduct runs from 2019 to the present, and until January 21, 2025, Lockheed was covered by Executive Order 11246. That order required federal contractors to keep written affirmative action plans for women and minorities, including workforce analyses and placement goals.
But those rules never allowed what the government alleges. The EO 11246 regulations said placement goals were not quotas, could not be used to prefer or select any individual because of race or sex, and could not override merit selection (41 CFR 60-2.16(e), 2019 edition). Title VII applied the whole time too.
So the line has not moved, even though the paperwork has:
| Area | Required under EO 11246 (until 2025) | Never allowed, before or after 2025 |
|---|---|---|
| Workforce data | Analyze representation of women and minorities | Use the data to pick, drop or rank individual employees |
| Goals | Set placement goals to guide outreach and find barriers | Treat goals as quotas, set-asides or targets managers must hit |
| Decisions | Make every selection on merit, without regard to race or sex | Adjust pay, hiring or promotion lists to change the numbers |
This history may also explain how an employer could drift from required goals into unlawful decisions, and it is a real risk for any company that ran affirmative action plans for years. Because the settlement includes no finding of liability, Lockheed may argue that some of what is alleged was part of its required compliance.
How the case started
The EEOC portion came from a 2025 Commissioner's Charge filed by EEOC Chair Andrea Lucas, meaning no individual employee had to file a charge first. The DOJ portion resolved a whistleblower suit in federal court in the Northern District of Texas and was brought under the Justice Department's Civil Rights Fraud Initiative, launched in May 2025. DOJ described it as its fourth False Claims Act settlement over race discrimination against employees.
What does the settlement require, and what should employers learn?
Under the EEOC agreement, Lockheed must comply with Title VII and Executive Order 14151, keep a merit-based workplace where race and sex play no part in hiring, pay, bonuses or promotions, and let the EEOC review its compliance during the agreement's term.
The lessons reach well beyond defense contractors:
Audit pay and bonus programs, not just hiring. The core allegation was that demographic "flags" changed who received merit increases. Any step that adjusts a pay list after reviewing demographics is a red flag. Our guide to lawful pay equity practices explains how to audit pay without crossing that line.
Separate measuring from deciding. Tracking workforce data is lawful and often required. Using that data to pick or drop individual people is not.
Rewrite manager incentives. Bonus metrics tied to hitting demographic numbers pressure managers to make race- or sex-based decisions.
Open every development program to all employees. Mentoring, sponsorship and leadership programs can focus on building inclusion, but eligibility cannot depend on race or sex.
Treat "aspirational" goals with care. Informal or non-public targets that steer hiring decisions carry the same risk as written quotas, and that includes placement goals left over from old EO 11246 plans.
Take internal complaints seriously. This case began with a senior insider. Employees who raise concerns about DEI practices are protected from retaliation like any other complainant.
Contractors: check your certifications. Every nondiscrimination certification in a federal contract is now a potential False Claims Act exposure, with treble damages and whistleblower rewards.
What do the 2026 midterm results mean for EEOC and DOJ enforcement?
As of November 8, 2026, Democrats have won control of both the Senate and the House in the November 3 midterms. They flipped seven Senate seats from the prior 53-47 Republican majority, with races in Alaska and Mississippi still undecided in early reporting (Northeastern University). The new Congress takes office in January 2027.
For employers, the short answer is that a new Congress changes the pressure on enforcement agencies, not the law itself or who runs them. The EEOC and DOJ are executive branch agencies, and their priorities are set by the President's appointees, who remain in place through at least January 2029.
| Lever | Who controls it | What could change |
|---|---|---|
| EEOC and DOJ priorities, Commissioner's Charges, False Claims Act cases | The President's appointees | Little in the near term; these settlements can continue |
| Confirming EEOC commissioners and general counsel | The Senate | A Democratic Senate may slow or block nominees, which can affect whether the EEOC keeps a voting quorum |
| Agency budgets | Congress, through appropriations | Funding riders could limit or redirect specific enforcement programs, subject to negotiation and veto |
| Oversight hearings and investigations | Committee chairs in both chambers | More scrutiny of the Civil Rights Fraud Initiative and EEOC priorities |
| New legislation | Congress, subject to presidential veto | Bills to change Title VII or contractor rules are unlikely to become law without bipartisan support |
| Title VII's text and court rulings | Congress and the courts | No change: Title VII protects all races and both sexes, and the Supreme Court held in Ames v. Ohio Department of Youth Services (2025) that majority-group plaintiffs face no heavier burden |
What this means in practice
Expect continued enforcement through 2028. The EEOC Chair has called these cases a core priority, and DOJ is pursuing them through its fraud initiative.
Do not plan around a future policy swing. Agency priorities can shift with a future administration, but claims can be filed years after the conduct, and the legal standard under Title VII does not change with elections.
Remember the other enforcers. Employees can file their own Title VII charges and reverse discrimination lawsuits, bring race claims directly under Section 1981, and file whistleblower suits under the False Claims Act. State attorneys general and state civil rights agencies also enforce their own laws, and their priorities vary widely.
Views on these enforcement actions differ sharply. Supporters see them as restoring equal treatment for every employee. Critics argue they chill lawful inclusion efforts and blur the line between illegal preferences and legitimate outreach. Either way, the safest compliance strategy is the same: build programs that never use race or sex to make individual employment decisions.
Is DEI the same as affirmative action?
No. DEI and affirmative action are often used interchangeably, but they are different things, and the difference matters legally.
DEI (diversity, equity and inclusion) is a broad, voluntary set of workplace practices. It can include anti-harassment training, accessible hiring, mentoring open to all, employee resource groups open to all, pay equity audits and inclusive leadership training. No federal law requires it, and no federal law bans it. What the law prohibits is using race, sex or another protected trait to make employment decisions, whatever the program is called.
Affirmative action is a specific legal obligation (or, in limited cases, a court-ordered remedy) that requires certain employers to take documented, proactive steps to recruit and advance specific protected groups. For federal contractors, it means written plans, outreach, data analysis and records
| Question | DEI | Affirmative action |
|---|---|---|
| Required by law? | No, voluntary | Yes, for covered federal contractors |
| Who it covers | Any employer that chooses it | Federal contractors and subcontractors above set thresholds |
| Source | Company policy | Section 503 of the Rehabilitation Act and VEVRAA (EO 11246 race and sex plans no longer apply) |
| Typical tools | Training, inclusive culture, open mentoring, accessible processes | Written plans, outreach, hiring benchmarks, annual reports |
| What is never allowed | Quotas or decisions based on race or sex | Quotas or decisions based on a protected trait |
Neither DEI nor affirmative action allows quotas, preferences or set-asides in individual decisions. The Lockheed allegations were not about having a DEI program. They were about using race and sex to decide who got pay increases, jobs, promotions and mentoring.
For a deeper look at where the legal lines fall, see our three-part series: Is DEI Legal? Part 1 on diversity in recruiting, hiring and promotion; Part 2 on pay equity, benefits and accommodations; and Part 3 on training, ERGs and workplace inclusion.
Which federal contractors still must do affirmative action?
Race- and sex-based affirmative action for federal contractors is gone, but affirmative action for people with disabilities and protected veterans remains a legal requirement. Executive Order 14173 revoked Executive Order 11246 on January 21, 2025. On August 21, 2026, OFCCP published three final rules that removed the EO 11246 regulations and updated the other two programs (EO 11246 rescission; Section 503 rule; VEVRAA rule).
| Program | Protects | Coverage threshold | Written plan required when | Status after the 2026 rules |
|---|---|---|---|---|
| Executive Order 11246 | Women and minorities | Not applicable | Not applicable | Regulations rescinded, effective October 26, 2026 |
| Section 503 of the Rehabilitation Act | Individuals with disabilities | Contract over $20,000 (up from $15,000) | 50+ employees and a contract of $50,000 or more | Narrowed, effective September 21, 2026: annual plan, outreach, accommodation and nondiscrimination duties remain; required self-ID invitations (Form CC-305) and the 7% utilization goal are gone |
| VEVRAA | Protected veterans | Contract of $200,000 or more (up from $150,000) | 50+ employees and a contract of $200,000 or more | Continues, effective September 21, 2026: mostly technical changes; the duty to employ and advance protected veterans and the hiring benchmark remain |
What federal contractors should do now
Keep your Section 503 and VEVRAA plans current, and make sure your nondiscrimination certifications in SAM.gov and in each contract are accurate.
Know that Form CC-305 is no longer required. If you still invite disability self-identification voluntarily, check ADA and state rules first.
Keep collecting race and sex data where Title VII, EEO-1 reporting or state law requires it, but use it only to find and fix problems, never to choose individuals.
Retire old EO 11246 placement goals so they do not linger as informal hiring targets.
Checklist: is your DEI program legally defensible?
Frequently asked questions
How much did Lockheed Martin pay to settle the EEOC and DOJ claims?
About $29.5 million: $22 million to the United States under the False Claims Act and about $7.5 million to more than 1,000 employees under an EEOC settlement agreement. A former Lockheed vice president who filed the whistleblower suit receives $4.4 million.
Is DEI illegal for private employers?
No. No federal law bans DEI. Title VII prohibits making employment decisions based on race, sex and other protected traits, so DEI practices that do that are unlawful. Inclusive practices that are open to everyone and do not affect individual decisions remain lawful.
Are employee resource groups (ERGs) legal after the Lockheed settlement?
Yes, if they are open to every employee. An ERG can focus on a shared interest or background, but limiting membership, leadership roles, funded events or career opportunities by race, sex or another protected trait creates Title VII risk. Review ERG charters and make open membership explicit. Part 3 of our DEI series covers ERGs in more detail.
What is a reverse discrimination claim?
It is an informal term for a discrimination claim brought by a member of a majority group, such as a white or male employee. Legally it is an ordinary Title VII claim, judged by the same standard as any other.
Can white or male employees sue for discrimination under Title VII?
Yes. Title VII protects employees of every race and sex. In 2025 the Supreme Court held in Ames v. Ohio Department of Youth Services that majority-group plaintiffs do not have to meet a heavier burden of proof.
Do federal contractors still need affirmative action plans?
Yes, but only for individuals with disabilities under Section 503 and protected veterans under VEVRAA. Race- and sex-based plans under Executive Order 11246 ended when the order was revoked, and OFCCP rescinded those regulations effective October 26, 2026.
What is the difference between DEI and affirmative action?
DEI is a voluntary set of workplace practices. Affirmative action is a legal requirement for covered federal contractors, now limited to people with disabilities and protected veterans. Neither allows quotas or preferences in individual decisions.
Will Democrats controlling Congress stop the EEOC's DEI enforcement?
Not directly. The EEOC and DOJ are run by the President's appointees. Congress can hold oversight hearings, set budgets and confirm or block nominees, but it cannot change Title VII without the President's signature or enough votes to override a veto.
Wasn't Lockheed required to have race and sex affirmative action goals?
Yes, until Executive Order 11246 was revoked on January 21, 2025. But the EO 11246 regulations said placement goals were not quotas and could never justify preferring or selecting an individual because of race or sex. The allegations are about using race and sex to make individual pay, hiring and promotion decisions, which was unlawful before and after 2025.
What is a Commissioner's Charge?
It is a discrimination charge filed by an EEOC commissioner rather than an employee. It lets the EEOC investigate a suspected pattern of discrimination without waiting for a worker to complain. The Lockheed case began with one filed by EEOC Chair Andrea Lucas in 2025.
Why did the False Claims Act apply?
Federal contractors certify that they comply with nondiscrimination requirements. DOJ alleged those certifications were false, which can make a contractor liable for up to triple damages plus penalties, and lets whistleblowers sue on the government's behalf and share in the recovery.
The bottom line
The Lockheed Martin settlement is not a ruling that inclusion is illegal. It is a warning that race- and sex-conscious decisions inside pay, hiring, promotion and development programs carry real liability, and that federal contractors face it twice. Election results may change the oversight around enforcement, but not Title VII. Audit your programs now, keep your Section 503 and VEVRAA obligations current, and build inclusion efforts that are open to everyone.
This article is for general information only and is not legal advice. Consult employment counsel about your specific programs.
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About CHRO, LLC
CHRO, LLC is an attorney-led fractional HR firm based in the Philadelphia suburbs. We help employers in Pennsylvania, New Jersey, Delaware, Maryland, New York and nationwide audit DEI, pay, hiring and promotion practices before they become a Title VII or False Claims Act problem. As your Outsourced CHRO, we review compensation and bonus processes, rebuild manager incentives and development programs so they are open to everyone, help federal contractors keep Section 503 and VEVRAA obligations current, and provide employee relations and HR compliance support. We also deliver manager training so leaders know how to use workforce data to fix processes, never to choose people.
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