/>iShortly after taking office, President Trump signed the executive order titled, Ending Illegal Discrimination and Restoring Merit-Based Opportunity. As discussed previously, that order, among other things, directed the Attorney General to identify (a) means “to encourage the private sector to end illegal discrimination and preferences, including DEI,” (b) litigation and potential regulatory action that can be taken, and (c) no more than nine civil investigations that can be initiated into public companies, “large non-profit corporations, . . . foundations with” more than 500 million in assets, medication associations, and other entities.
Following that executive order, Attorney General Bondi released a memo titled, Ending Illegal DEI and DEIA Discrimination and Preferences. Citing the Supreme Court’s decision in Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll., the Attorney General noted that DEI and DEIA policies “violate the text and spirit of our longstanding Federal civil-rights laws.” She directed the Civil Rights Division of the Department of Justice (DOJ) to “investigate, eliminate, and penalize illegal DEI and DEIA preferences, mandates, policies, programs, and activities in the private sector.” Bondi noted that the DOJ is focused on “programs, initiatives, or policies that discriminate, exclude, or divide individuals based on race or sex.” Conversely, Bondi clarified that federal civil rights laws do “not prohibit educational, cultural, or historical observances . . . that celebrate diversity, recognize historical contributions, and promote awareness without engaging in exclusion or discrimination.”
The federal government has taken a number of steps to implement these directives. For example, the Federal Communications Commission and the U.S. Department of Health and Human Services Office for Civil Rights have initiated multiple DEI-related investigations. Similarly, various federal agencies have taken steps to remove DEI mandates from contracts. The federal government has also cancelled certain contracts in response to President Trump’s executive order.
On May 19, the DOJ took another step to effectuate the current administration’s DEI-related directives. Specifically, Deputy Attorney General Todd Blanche released a memo detailing the DOJ’s Civil Rights Fraud Initiative (Initiative). In the memo, Blanche echoed the DOJ’s commitment “to enforcing federal civil rights laws and ensuring equal protection under the law.” Blanche cautioned that several companies are still using “racist policies and preferences” that are “camouflaged with cosmetic changes that disguise their discriminatory nature.”
To achieve the current administration’s DEI-related goals, Blanche explained that the DOJ would vigorously use the False Claims Act (FCA) “against those who defraud the United States by taking its money while knowingly violating civil rights laws.” Among other things, Blanche explained that the treble damage and substantial penalties available under the FCA will be helpful tools in this enforcement initiative.
Blanche provided several examples of situations that could trigger FCA liability. Those include:
- A university receiving federal funding while permitting antisemitism, failing to “protect Jewish students,” allowing “men to intrude into women’s bathrooms,” or requiring “women to compete against men in” sports; and
- Recipients of federal funding or government contractors certifying compliance with federal civil rights laws while using “racist preferences, mandates, policies, programs, and activities.”
The Initiative will be led by the Fraud Section and the Civil Rights Division. In addition, an Assistant United States Attorney from each U.S. Attorney’s Office will be tasked to support the Initiative. The Initiative will also meet and share information with the Criminal Division, other federal agencies, state attorneys general, and local law enforcement. Blanche “strongly” encouraged private parties to file FCA lawsuits to address civil rights fraud and also asked that “anyone with knowledge of discrimination by federal-funding recipients” report that information to the federal government.
The Civil Division reported that it recovered more than $2.9 billion in fiscal year 2024 for FCA-related settlements and judgments. If the Initiative is successful in using the FCA, companies should expect a significant increase in the risks stemming from their DEI-related efforts. So, companies (especially those who receive federal funding or otherwise work with the federal government) should ensure they have taken the necessary reviews of their DEI-related initiatives. All signs indicate that this will not be the last action taken by the federal government in this sector. It is thus essential that companies remain abreast of developments in this area, including guidance from the federal government concerning what constitutes illegal DEI programs and policies.
