American Water's DEI Employment Practices: What the Company's Own Documents Show — and What They Mean for Employees

Published August 27, 2026 · Last updated August 27, 2026 · By Fett Law — Michigan Employment Discrimination Attorneys

American Water Works Company, Inc. documented demographic employment practices in its own proxy statements, sustainability reports and inclusion reports between 2020 and 2024: "diverse candidate slates and diverse interview panels" as a stated workforce strategy, an audited target for the share of job requisitions carrying a diverse candidate pool, a published goal to increase minority and female representation "at all levels of the company," and — beginning with the 2022 plan year — workforce diversity goals written into the Annual Performance Plan, the company's cash bonus plan. "Employee Diversity" was a named 2023 APP performance measure; it is absent from the 2024 measures, and the company's proxy stopped describing diversity as an APP metric with the March 2025 filing. American Water's Military Services Group operates on 18 military installations under 50-year contracts with the U.S. government. Similar practices were the basis of IBM's $17 million False Claims Act settlement with the U.S. Department of Justice in April 2026 and Deloitte's $21.5 million settlement in August 2026.

Key facts

Did American Water tie bonus pay to diversity goals?

The clearest statement is in the company's 2023 proxy statement, filed March 28, 2023 and reporting on fiscal year 2022:

"In 2022, we included new workforce diversity goals in our Annual Performance Plan, or APP, designed to increase the representation of women and ethnic and racial diversity in the Company's workplace."

American Water Works Company, Inc., 2023 Proxy Statement, p. iii, Social Responsibility

The same proxy summarizes the plan's design for shareholders in a single sentence, and the 2024 proxy repeats it word for word:

"Our APP includes metrics related to safety, environmental leadership, and diversity, highlighting our commitment to ESG principles."

American Water Works Company, Inc., 2023 Proxy Statement, p. ix, and 2024 Proxy Statement, p. v, Executive Compensation Highlights

The company's 2023 Sustainability Report is more specific still. It sets out what an employee had to have in place to be eligible for an APP payout, and one of the three social measures is a demographic one:

"Performance measures and other mandatory training requirements for 2023 APP eligibility included the following:
■ Environmental—Drinking Water Quality and Program Compliance;
■ Social—Customer Satisfaction, Employee Safety and Employee Diversity; and
■ Governance—Our Code of Ethics program requires completion of a training module in order for an employee to be eligible to receive an APP payout."

American Water Works Company, Inc., 2023 Sustainability Report, p. 11. Emphasis added.

What this meant in practice. The Annual Performance Plan is not a narrow executive arrangement — it is the plan under which American Water funds annual cash incentives, and the report frames these measures as conditions of "APP eligibility." A measure called "Employee Diversity," sitting alongside customer satisfaction and employee safety, is a demographic outcome that money moved with. During the same years the company's stated workforce diversity goals were, in its own words, "designed to increase the representation of women and ethnic and racial diversity."

The honest limits. American Water has never published how heavily the Employee Diversity measure weighed inside the APP, what numeric result it was scored against, whether it ever changed a payout, or how it was cascaded to individual managers. That is different in kind from a bonus formula keyed openly to a representation percentage. Those mechanics are internal documents — and they are exactly the kind of thing the people who administered the plan know first-hand.

Then it stopped appearing. The 2024 Sustainability Report, published in July 2025, prints the same eligibility list with the demographic measure gone: "Performance measures and other mandatory training requirements for 2024 APP eligibility included the following: ■ Drinking Water Quality and Program Compliance goals; ■ Customer Satisfaction and Employee Safety goals." The proxy summary sentence changed the same year. The 2025 proxy, filed in March 2025, reads: "Our cash-based annual performance plan, or APP, includes metrics related to safety and environmental leadership, highlighting our commitment to sustainability principles." The words "and diversity" are gone, and the 2026 proxy carries the shortened sentence forward. A search of American Water's proxy filings shows the abbreviation "ID&E" and the phrase "Inclusion, Diversity and Equity" appearing in the 2022, 2023 and 2024 proxies and in none filed since.

Sources: 2023 Proxy Statement · 2024 Proxy Statement · 2023 Sustainability Report · 2024 Sustainability Report · 2025 Proxy Statement.

Did American Water require diverse candidate pools and diverse interview panels?

The strategy is stated in the company's 2020 Inclusion & Diversity Report, its first annual report of its kind, in the list of workforce initiatives:

"Diverse candidate slates and diverse interview panels"

American Water Works Company, Inc., 2020 Inclusion & Diversity Report, p. 25

The same report describes how broadly it applied, and it is not limited to senior roles:

"A core focus of ours is diversity in recruitment and retention of employees. Diversity is a focus on every job requisition and candidate pool."

American Water Works Company, Inc., 2020 Inclusion & Diversity Report, p. 14

What turns a stated focus into an operative practice is measurement against a target, and American Water published both. The same page reports the metric "Percentage of Requisitions with Diverse Candidate Pool" at 86% for 2020 against a 90% goal.

The company then carried that number into its proxy statements, where it speaks to shareholders. The 2022 proxy reports:

"During 2021, approximately 86 percent of our job requisitions had a diverse candidate pool."

American Water Works Company, Inc., 2022 Proxy Statement, p. iii

And the 2023 proxy adds the promotion side of the same machinery:

"During 2022, approximately 83 percent of our job requisitions had a diverse candidate pool, with approximately 46 percent of transfers or promotions filled by diverse individuals."

American Water Works Company, Inc., 2023 Proxy Statement, p. iii

What this meant in practice for a candidate. A requisition-level metric scored against a 90% goal is a rule that operates before anyone is interviewed. Someone had to look at each opening, assess whether the pool satisfied the demographic condition, and do something about it when it did not — extend the search, add names, hold the requisition. That machinery affects candidates in both directions. It can keep a qualified applicant out of a pool that has already met its condition; and it can put an applicant into an interview whose outcome was effectively settled, so that the panel could be described as diverse. Reporting the share of transfers and promotions "filled by diverse individuals" applies the same lens to internal moves — the promotions people compete for against colleagues they know.

What American Water did not publish is the operative detail: whether the 90% figure was a hard gate or an aspiration, what a recruiter was required to do when a pool fell short, and whether any requisition was ever held open. Those are internal records.

Sources: 2020 Inclusion & Diversity Report · 2022 Proxy Statement · 2023 Proxy Statement.

Did American Water set goals to increase minority and female representation?

The goal is stated plainly in the 2020 report, immediately after the company publishes its own demographics:

"We recognize we're not where we need to be. That is why our goal for 2021 is to increase minority and female representation at all levels of the company."

American Water Works Company, Inc., 2020 Inclusion & Diversity Report, p. 13

Two years later the same objective appears attached to the bonus plan — which is what makes this marker matter rather than being an aspiration in a brochure:

"In 2022, we included new workforce diversity goals in our Annual Performance Plan, or APP, designed to increase the representation of women and ethnic and racial diversity in the Company's workplace."

American Water Works Company, Inc., 2023 Proxy Statement, p. iii

The 2023 Sustainability Report restates the aim and reports the position against it:

"Our goal is to increase diversity across our workforce that represents the diversity of our customers and other stakeholders. In 2023, 24.1% of our employees voluntarily self-identified as female and 20.2% were ethnically/racially diverse."

American Water Works Company, Inc., 2023 Sustainability Report, p. 36

What this meant in practice. A goal to increase representation "at all levels of the company" can only be met by changing who is hired into and promoted into those levels. When that goal is also written into the plan that funds annual cash bonuses, the people making hiring and promotion decisions have a reason beyond exhortation to move the number. Whether it changed any particular decision is a fact question the reports cannot answer — the answer lives with the managers, recruiters and human-resources staff who worked the requisitions.

What is fair to the company. American Water published no quota, no numeric representation target and no deadline, and its reports describe the aim as aligning the workforce with the communities it serves. It has never been found by any court or agency to have violated any law, and no enforcement action against it on these grounds has been announced.

Sources: 2020 Inclusion & Diversity Report · 2023 Proxy Statement · 2023 Sustainability Report.

What happened to American Water's DEI reports and website?

The sequence is documented in the company's own filings. American Water announced the site in May 2022 alongside its 2021 Inclusion, Diversity & Equity Report, and its 2024 proxy statement lists among the company's ESG highlights the "[o]ngoing disclosure of key diversity metrics, including as to employees and residential customers, via our DiversityatAW.com website." The 2023 Inclusion, Diversity & Equity Summary was published there on April 11, 2024.

As of August 27, 2026, requesting diversityataw.com returns a redirect to cultureataw.com. The replacement page's headings are "Our Culture is Built on Trust, Respect and Dignity for All," "Being a Catalyst for Change," "We Value our Suppliers" and "Our Partners." The stated values are "Safety First, Trust, Dignity and Respect, One Team, Environmental Leadership and High Performance." The 2023 ID&E Summary's published address returns a 404 error; an archived copy captured May 24, 2024 is preserved in the Internet Archive.

The reports that remain tell the same story from the inside. The 2023 Sustainability Report carries a diversity goal, workforce demographics and "Employee Diversity" as an APP measure. The 2024 Sustainability Report, published in July 2025, has no representation goal, no diversity measure in the APP list, and frames the subject as culture: "Beautifully Different" and the "Catalyst for Change framework." The five Employee Business Resource Groups survive, described as "open to all employees."

If any part of your situation depends on what these documents said, download them rather than bookmarking them. A page that is one redirect from disappearing has already shown what it will do.

How American Water's DEI program changed, 2020–2026

Why these practices matter legally

Title VII protects everyone, in both directions

Title VII makes it unlawful for an employer to discriminate against any individual with respect to compensation, terms, conditions or privileges of employment because of race, color, religion, sex or national origin. It does not create a protected class of beneficiaries and an unprotected class of everyone else. In Ames v. Ohio Department of Youth Services, decided June 5, 2025, a unanimous Supreme Court rejected the "background circumstances" rule that several federal circuits had used to require majority-group plaintiffs to make an extra showing before their claims could proceed. In Muldrow v. City of St. Louis (2024), the Court held that a plaintiff challenging a discriminatory job transfer need show only "some harm" to an identifiable term or condition of employment — not a "significant" or "material" disadvantage. That standard reaches actions well short of a firing: a lateral move, a lost assignment, an exclusion from a candidate pool.

Section 1981 reaches race discrimination in employment contracts

42 U.S.C. § 1981 guarantees all persons the same right to make and enforce contracts as is enjoyed by white citizens, and it applies to employment relationships. Two features matter for anyone evaluating an older claim: it carries a four-year limitations period, and it requires no charge with the Equal Employment Opportunity Commission before suit. It also has no damages cap.

The False Claims Act route for federal contractors

On April 10, 2026, the U.S. Department of Justice announced that IBM would pay $17,077,043 to resolve False Claims Act allegations that it failed to comply with anti-discrimination requirements in its federal contracts — the first settlement under the DOJ's Civil Rights Fraud Initiative. In August 2026 the government resolved a second, larger matter: under a settlement agreement effective August 21, 2026, five Deloitte entities agreed to pay $21,500,000, of which $9,995,000 was restitution, covering conduct from January 1, 2017 through the settlement date. The certification hook is specific — Title VII as incorporated into federal contracts and FAR clause 52.222-26 — and the government's theory reached not only what Deloitte certified to its contracting agencies but what it "publicly represented" about its compliance. The agreement adds a second and independent theory: that Deloitte "allocated costs to its federal government contracts relating to these practices and sought payment and reimbursement under its federal government contracts for such costs." The whistleblower was paid $4,300,000. Both settlements resolved allegations only, with no determination of liability, and Deloitte denies the conduct.

The conduct the government described in the Deloitte agreement is worth reading against any contractor's own documents, because it names the categories: "non-public race and sex-based workforce composition goals for business units," monthly summaries flagging progress "in green, yellow, or red," senior professionals "evaluated, in part, based on their contributions to helping Deloitte achieve its workforce composition goals," candidates "identified by race and sex in a spreadsheet," goals for "the demographics of employees staffed to federal contracts," and programs "where eligibility to participate was limited on the basis of race and sex." Those are allegations Deloitte denies; no court ruled on them.

American Water's position on the government-business side is not in doubt. Its Military Services Group, in the company's own words in its FY2025 Form 10-K, "operates on 18 military installations under 50-year contracts with the U.S. government as part of its Utilities Privatization Program," with a backlog "of approximately $7.4 billion" and "an average remaining contract term of 37 years." Whether the certifications those contracts required were made, what they said, and how costs were allocated are facts that live inside the company.

To be clear about what is and is not established: no court or agency has found that American Water's practices violated any law, and no enforcement action against the company on these grounds has been announced. But practices like those documented above — a bonus-plan measure called "Employee Diversity," a requisition-level diverse-pool target, and a goal to raise representation at all levels — are the categories these claims examine. For the complete framework — the four illegal DEI practice categories and when you can sue — see our guide, Is DEI Illegal? 4 Illegal DEI Practices & When You Can Sue.

Were you affected by these practices at American Water?

If you worked at American Water Works Company, Inc. or one of its state subsidiaries — New Jersey American Water, Pennsylvania American Water, Missouri American Water, Illinois American Water, Indiana American Water, California American Water, West Virginia American Water, Virginia American Water and the rest — or at American Water Military Services Group, or applied to any of them between roughly 2020 and 2025, the documented practices above may have touched your career:

• You applied and never reached an interview, and cannot account for it against your record, during years when the company measured the share of its job requisitions carrying a diverse candidate pool against a 90% goal.
• You were passed over for a promotion or a transfer while the company reported to shareholders the share of transfers and promotions "filled by diverse individuals" and published a goal to increase minority and female representation "at all levels of the company."
• You sat on or in front of an interview panel assembled for its composition — slate and panel rules injure the candidates they nominally favor too, when the outcome was effectively settled before the interview.
• You were a manager, recruiter or human-resources professional whose bonus eligibility ran through an Annual Performance Plan carrying an "Employee Diversity" performance measure — someone with first-hand knowledge of how that measure was scored, what it was worth, and what managers were told to do about it.
• Your work touched the Military Services Group or the federal contracts — the staffing of those contracts, the certifications made under them, or how program costs were allocated and billed.

There is a separate question worth asking if your work touched the company's federal business. The False Claims Act's qui tam mechanism lets an individual bring a claim on the government's behalf, and potentially share in any recovery, where a contractor certified compliance with federal anti-discrimination requirements while doing something else — or, on the second theory the Deloitte agreement adds, charged the government for the costs of the practices themselves. American Water holds 50-year utility privatization contracts on 18 military installations. Whether the relevant certifications were made and what they said is the sort of thing an insider may know. Qui tam complaints are filed under seal, so a whistleblower's identity is initially protected while the government investigates. Both Title VII and the False Claims Act prohibit retaliation against people who assert their rights or report violations.

A federal settlement is not a substitute for your own claim: when the Justice Department resolved the Deloitte matter, it expressly preserved the EEOC's right to pursue charges alleging the very same conduct, and preserved individual liability. Nothing about that settlement compensated a single employee or applicant.

If any of these fits, it costs nothing to find out where you stand — meet our DEI discrimination lawyers, or start below.

What could a claim against American Water be worth?

Damages in individual discrimination cases

Back pay and front pay are uncapped under Title VII. Compensatory and punitive damages under Title VII are capped by employer size — $300,000 for employers with more than 500 employees, the bracket American Water occupies at approximately 7,000 employees — but race claims under 42 U.S.C. § 1981 carry no damages cap at all, which is one reason race discrimination cases are often pleaded under it. Several state civil-rights statutes are likewise uncapped, including New Jersey's Law Against Discrimination, which governs the company's headquarters workforce, and Michigan's Elliott-Larsen Civil Rights Act. Prevailing plaintiffs generally recover attorney's fees on top. For a sense of what employment discrimination cases can produce, Fett Law's own results include a $10.5 million race and age discrimination class action against Ford Motor Company, a $1.1 million jury judgment for a Michigan State Police trooper, and a $460,000 reverse-discrimination settlement for three Michigan Department of Corrections officers. Prior results do not guarantee a similar outcome.

Whistleblower rewards under the False Claims Act

Under 31 U.S.C. § 3730(d), a qui tam relator receives 15–25% of the government's recovery when the Department of Justice intervenes, and 25–30% when the relator proceeds without intervention. The Deloitte settlement supplies a paid benchmark rather than a projection: the relator received $4,300,000 — exactly 20% of a $21,500,000 recovery. That settlement also shows why False Claims Act exposure outruns the money actually lost. Of the $21.5 million, $9,995,000 was restitution — roughly the government's single damages — so the resolution came to about 2.15 times the actual loss, because FCA recoveries are built on multiplied damages plus per-claim penalties. As a second illustration, arithmetic alone: an intervened case resolving at IBM's $17,077,043 would pay a relator roughly $2.6–$4.3 million. A contractor with a larger federal book or a longer conduct period could produce a materially larger number.

Class action potential

Class actions are built on a single policy applied to many people. A requisition-level rule applied to "every job requisition and candidate pool," and a bonus-plan measure that reached everyone eligible for an APP payout, are by construction companywide. Historic employment-discrimination class settlements show the range such cases can reach: Coca-Cola paid $192.5 million (2000), Texaco $176.1 million (1996) and Novartis $175 million (2010) to resolve class claims.

Every case depends on its own facts — these figures show the range the law makes possible, not a promise of any outcome. The fastest way to learn where your situation falls is to start a confidential intake or request a free consultation.

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