On May 19, 2025, the U.S. Department of Justice (DOJ) announced a new unit, the Civil Rights Fraud Initiative, which will utilize the False Claims Act (FCA) to investigate and, as appropriate, pursue claims against any recipient of federal funds who knowingly violates federal civil rights laws with illegal diversity, equity, and inclusion (DEI) policies.
As explained in the DOJ’s memorandum, the FCA is implicated when a federal contractor or recipient of federal funds knowingly violates civil rights laws and falsely certifies compliance with such laws. As a reminder, under presidential Executive Order 14173, entitled “Ending Illegal Discrimination and Restoring Merit Based Opportunity,” which was issued on January 21,2025, all federal contracts and grant awards must now include terms requiring the contracting party or grant recipient, as applicable, to certify to the government that they do not operate any programs promoting DEI that violate any federal anti-discrimination laws and acknowledge that their compliance with these laws is material to the government’s contract payment decisions as defined in the FCA.
The initiative will be co-led by the Civil Division’s Fraud Section, which enforces the FCA, and the Civil Rights Division, which enforces civil rights laws, who will be assisted by assistant U.S. attorneys designated by the 93 U.S. attorneys' offices. The initiative also calls for engagement with the Criminal Division; as well as other federal agencies that enforce civil rights requirements for federal funding recipients, including the Department of Education, the Department of Health and Human Services, the Department of Housing and Urban Development, and the Department of Labor; and partnerships with state attorneys general and local law enforcement.
The memorandum also encourages private parties with knowledge of discrimination by federal funding recipients to file lawsuits (as they are entitled to do under the FCA) or report that information to the appropriate federal authorities. As noted in the memorandum, liability under the FCA may result in treble damages and significant penalties.
As the legality of the Trump administration’s DEI-focused executive orders are hashed out in court, companies should continue to take stock of their DEI policies, programs, and public disclosures to ensure they comply with all anti-discrimination laws and determine their potential exposure to legal or administrative challenges or investigations.
Companies doing business with the federal government or receiving federal funding should also consult with counsel before responding to any certification requests from the government to minimize their legal exposure, and should continue to monitor developments in the litigation challenging these certifications and other provisions of the Trump administration’s DEI-focused executive orders.
