{"id":313951,"date":"2026-05-13T17:44:13","date_gmt":"2026-05-13T17:44:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/313951\/"},"modified":"2026-05-13T17:44:13","modified_gmt":"2026-05-13T17:44:13","slug":"san-jose-tech-giant-paypal-agrees-to-30-million-settlement-with-feds-over-dei-fund-the-mercury-news","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/313951\/","title":{"rendered":"San Jose tech giant PayPal agrees to $30 million settlement with feds over DEI fund \u2013 The Mercury News"},"content":{"rendered":"

In 2020 San Jose financial technology giant PayPal<\/a> proudly announced it would spend a half a billion dollars to support Black and minority businesses and communities because, in the words of then-CEO Dan Schulman, \u201cBlack lives matter.\u201d<\/p>\n

On Tuesday, the company agreed to a $30 million settlement with the federal government to resolve claims that the $500 million Economic Opportunity Fund was discriminatory.<\/p>\n

The U.S. Department of Justice said Tuesday that the fund \u201cgave a preference to businesses based on race, color, and national origin,\u201d but was not implemented to address \u201cany specific instances\u201d of discrimination.<\/p>\n

\u201cThis Department of Justice is delivering on President Trump\u2019s vow to root out illegal DEI from every corner of corporate America,\u201d said acting U.S. Attorney General Todd Blanche. \u201cAmerican corporations are on notice: you will face our aggressive enforcement if you use race or national origin to discriminate against qualified Americans.\u201d<\/p>\n

The government\u2019s contention that DEI is by nature discriminatory relies on the concept of \u201creverse discrimination,\u201d in which dominant groups are seen as victims of racism, said UC Santa Cruz lecturer Nolan Higdon, who studies the technology industry and U.S. culture and politics. Higdon rejects the concept.<\/p>\n

\u201cTo be able to be racist you have to have the power over other people,\u201d Higdon said. \u201cPeople of color don\u2019t have power over other people in the United States.\u201d<\/p>\n

The Justice Department noted the Equal Credit Opportunity Act prohibits creditors from discriminating against applicants \u201con the basis of race, color, religion, national origin, sex, marital status, age\u201d and other protected characteristics.<\/p>\n

PayPal in agreeing to the settlement admitted no liability in connection with the fund, the settlement agreement said<\/a>. The federal government in the agreement said it had not found PayPal\u2019s fund violated any laws, including the Equal Credit Opportunity Act.<\/p>\n

When PayPal announced the fund in 2020, it said it would put $500 million into supporting businesses owned by Black people and under-represented minorities, including through direct investments in Black- and minority-led startups and minority-focused investment funds.<\/p>\n

\u201cFor far too long, Black people in America have faced deep-seated injustice and systemic economic inequality,\u201d Schulman said in the announcement. \u201cBlack lives matter and we need to drive transformative change. We must take decisive action to close the racial wealth gap that sustains this profound inequity.\u201d<\/p>\n

Schulman stepped down as PayPal CEO in 2023 and Enrique Lores is now its chief executive.<\/p>\n

Under the agreement announced Tuesday, PayPal will create a new program called the Small Business Initiative that will waive $30 million in fees on about $1 billion in financial transactions by U.S. small businesses engaged in farming, manufacturing, technology, or other industries if the business is certified as veteran-owned. The agreement specifically mentions that artificial intelligence enterprises are included among eligible technology companies.<\/p>\n

\u201cFor more than two decades, PayPal has helped small businesses start, scale, and thrive by expanding access to digital financial tools,\u201d PayPal said in a statement. \u201cWe\u2019re excited to launch the Small Business Initiative to infuse American small businesses with even more economic opportunity.\u201d<\/p>\n

The company said the Economic Opportunity Fund \u201cwas a one-time initiative, under a previous leadership team, with investment selection made at least five years ago,\u201d but added that it maintains its 19 investments made by the fund in minority-led venture capital firms.<\/p>\n

The settlement comes as the administration of President Donald Trump in his second term has targeted businesses and universities<\/a> over DEI initiatives it claims are discriminatory and research it has labeled DEI<\/a>.<\/p>\n

Last month, New York-based IBM agreed to pay $17 million in a settlement with the Justice Department to resolve claims by the department that it took race and sex into account during hiring and promotions. IBM, in settling, denied the allegations<\/a>.<\/p>\n

Bay Area technology giants that have provided public support to President Donald Trump<\/a> by donating money to his 2025 inauguration and new White House ballroom have publicly pulled back from DEI.<\/p>\n

Just after Trump took office, Google scrapped its diversity hiring goals. Annual reports by Mountain View digital advertising titan Google\u2019s parent firm Alphabet since the start of Trump\u2019s second term cut references to DEI, after saying from 2021 to 2024 that the company was \u201ccommitted to making diversity, equity, and inclusion part of everything we do<\/a> and to growing a workforce that is representative of the users we serve.\u201d The words \u201cracial equity\u201d<\/a> disappeared from Google\u2019s \u201cBelonging\u201d web page<\/a> around the time Trump took office in 2025.<\/p>\n

Last week, a judge approved<\/a> a $50 million settlement in a 2022 lawsuit<\/a> accusing Google\u00a0of paying Black workers lower wages, denying them advancement opportunities and subjecting them to a hostile work environment. In settling the lawsuit, Google denied improperly treating Black workers.<\/p>\n

Facebook parent Meta of Menlo Park in early 2025 did away with its major DEI programs, including those involved with hiring, training and the selection of suppliers, Axios reported<\/a>.<\/p>\n

PayPal, in its annual reports filed since Trump took office in 2025, has continued to report its workforce gender and ethnic diversity percentages<\/a>, but dropped language about \u201cfostering diversity, inclusion, equity, and belonging<\/a>.\u201d<\/p>\n

UC Santa Cruz\u2019s Higdon noted that many Silicon Valley companies are vulnerable to federal government policies and actions on regulation, taxation and contracting. PayPal on its website says nearly 200 federal agencies, including the IRS and U.S. Postal Service, accept its service for payments. As a digital-payments application, PayPal is regulated by the federal Consumer Financial Protection Bureau.<\/p>\n

Silicon Valley companies began embracing DEI last decade because their own analysis found their workforces lacked racial and gender diversity, while reports began emerging that showed \u201cvery unpleasant experiences\u201d for women and minority employees, and academic research found that \u201cdiversity actually leads to better business outcomes,\u201d said Ann Skeet, senior director of leadership ethics at Santa Clara University\u2019s Markkula Center for Applied Ethics.<\/p>\n

Higdon sees Silicon Valley firms\u2019 past public support for DEI as largely \u201cwoke-washing\u201d that caters to the public sentiment of the moment, and doesn\u2019t resonate with working class Americans who have seen wages stagnating since the 1970s, and opportunities for people of color not matching the talk from corporate offices.<\/p>\n

\u201cWhen Trump says he\u2019s getting rid of that stuff, that really appeals to working class people,\u201d Higdon said.<\/p>\n

The Justice Department\u2019s statement that the PayPal settlement delivered on \u201cPresident Trump\u2019s vow to root out illegal DEI\u201d highlights the department\u2019s role under Trump as an arm of the White House rather than as an independent agency, as it has traditionally been seen, Skeet said.<\/p>\n

However, race- and gender-based inequalities remain in many areas of society and the economy, Skeet said. While some companies are actually stopping diversity work, many are continuing to pursue it but are changing the way they talk about it, Skeet said. Under a Democratic administration, DEI will likely be back on the table openly, she said.<\/p>\n

\u201cThis really does feel like political theater to some degree,\u201d Skeet said.<\/p>\n","protected":false},"excerpt":{"rendered":"In 2020 San Jose financial technology giant PayPal proudly announced it would spend a half a billion dollars…\n","protected":false},"author":2,"featured_media":313952,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[29],"tags":[184,387,7,8,138,181,23,2649,194,2582,100,131423,395,182,13,14262,385,88,90,89,397,198,94685,200,2442,1970,1695],"class_list":["post-313951","post","type-post","status-publish","format-standard","has-post-thumbnail","category-san-jose","tag-bay-area","tag-business","tag-california","tag-california-news","tag-crime-and-public-safety","tag-latest-headlines","tag-local-news","tag-menlo-park","tag-mountain-view","tag-national-politics","tag-news","tag-paypal","tag-peninsula","tag-pm-report","tag-politics","tag-race-race-relations","tag-regional","tag-san-jose","tag-san-jose-headlines","tag-san-jose-news","tag-san-mateo-county","tag-santa-clara-county","tag-social-alert","tag-south-bay","tag-south-bay-crime","tag-technology","tag-trump-administration"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/313951","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=313951"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/313951\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/313952"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=313951"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=313951"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=313951"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}