DEI Programs Under Scrutiny: False Claims Act Enforcement Shifts in Trump Administration

Government contractors and institutions receiving federal funding face significant new compliance challenges following executive orders from the Trump administration targeting diversity, equity, and inclusion (DEI) programs.

In a dramatic policy shift that began on January 21, the administration issued Executive Order 14173, which revoked the longstanding Executive Order 11246 that had established equal employment opportunity requirements for federal contractors. The new order implemented a certification requirement obligating contractors to affirm compliance with federal “anti-discrimination” laws—a term now being redefined under the current administration.

“This represents a fundamental shift in how the government views discrimination,” explains Julia Kopcienski, an attorney with Husch Blackwell’s White Collar and False Claims Act practice group. “We’re seeing a move from protecting minority status individuals to what the administration describes as a more equal, merit-based approach across the board.”

The Department of Justice quickly embraced this directive, with Attorney General Pam Bondi issuing a February memo affirming the department’s commitment to investigating and prosecuting what the administration terms “civil rights fraud.” By May, the DOJ had launched the Civil Rights Fraud Initiative, combining resources from multiple offices to target alleged violations of anti-discrimination laws.

What makes this enforcement approach particularly noteworthy is the administration’s decision to use the False Claims Act (FCA) as its primary enforcement mechanism. Traditionally, anti-discrimination violations have been addressed through private lawsuits or injunctive relief, not through the FCA, which carries much steeper penalties.

“We’re talking about treble damages and penalties for each false claim,” Kopcienski notes. “It’s a significantly more aggressive approach than we’ve seen in the past.”

In July, the Attorney General issued another memo providing more specific guidance on what might constitute violations of federal anti-discrimination laws. This included examples related to training programs, hiring and promotion practices, and employee resource groups. The memo cautioned against using proxies for protected characteristics and emphasized that diversity programs should apply equally to all employees, regardless of minority status.

The administration’s enforcement strategy relies heavily on whistleblowers, who historically initiate the majority of False Claims Act cases. This approach makes strategic sense given the nature of potential violations, which often occur within an organization’s internal operations—in training sessions, hiring processes, or employee resource groups.

“DEI is such a politically charged issue,” Kopcienski observes. “Almost everyone has some opinion or personal experience with these policies, making potential violations more easily recognizable to insiders compared to something like accounting fraud or FCPA violations.”

For contractors, the key defensive consideration is whether they have signed an express certification under EO 14173. If so, they face a more challenging legal landscape, as such certifications make it harder to argue lack of knowledge, materiality, or falsity.

“Even with a signed certification, there’s still room for defense,” Kopcienski emphasizes. “The certification requires compliance with ‘federal anti-discrimination laws,’ but the interpretation of what constitutes discrimination is evolving rapidly under this administration.”

This enforcement initiative raises significant questions about the scope and application of the False Claims Act itself. Only nine years ago, the Supreme Court ruled that the FCA “is not an all-purpose anti-fraud statute,” suggesting courts might be skeptical about this expansive new use.

Higher education institutions, already adapting their DEI policies following the Supreme Court’s Students for Fair Admissions decision, are particularly vulnerable under this enforcement regime. Many are proactively reviewing their diversity programs to ensure compliance with both judicial precedent and the new executive directives.

As these cases begin to take shape, both government contractors and institutions receiving federal funding face a complex compliance landscape. The intersection of DEI policies and False Claims Act enforcement represents uncharted territory, with significant financial and reputational risks for organizations found to be in violation of the administration’s interpretation of anti-discrimination laws.