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The Department of Justice is intensifying its use of the False Claims Act to target immigration compliance issues among federal contractors and grant recipients, marking a significant shift in enforcement priorities under the Trump administration. This expanded application of the FCA creates substantial new liability risks for organizations that receive federal funding.
In September, the DOJ announced that Bayonne Drydock and Repair Corporation agreed to pay over $4 million to resolve allegations it employed unauthorized immigrants on federal contracts. This follows a January settlement where another contractor paid approximately $1 million for similar violations. Both cases centered on failures to comply with Federal Acquisition Regulation 52.222-54, which mandates employment verification through the federal E-Verify database.
These settlements highlight a growing pattern of enforcement targeting contractors who neglect proper immigration verification protocols. Legal experts note that prime contractors must not only ensure their own compliance but also monitor their subcontractors’ adherence to E-Verify requirements to avoid potential FCA liability.
The administration’s reinterpretation of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) presents another emerging risk area. In July, officials effectively rescinded longstanding guidance that had limited which federal programs were considered “federal public benefits” requiring immigration status verification.
“This policy shift dramatically expands the scope of programs that must verify immigration status before providing services,” explains immigration policy analyst Maria Rodriguez. “Programs that previously operated without these restrictions, including Head Start, Title X family planning clinics, and community health centers, are now potentially subject to these requirements.”
While courts have temporarily blocked implementation in several states—with a nationwide injunction specifically protecting Head Start programs—many aspects of the policy remain in effect. Organizations administering these programs face potential FCA liability if they fail to implement proper verification procedures where required.
The administration has also imposed new conditions on federal grants requiring recipients to cooperate with immigration enforcement. Agencies including the Departments of Homeland Security, Housing and Urban Development, Transportation, and Health and Human Services have attached immigration cooperation requirements to their grant programs, often alongside conditions related to diversity, equity, and inclusion policies.
These conditions particularly impact so-called “sanctuary cities”—jurisdictions with policies limiting cooperation with federal immigration authorities. Though several jurisdictions have successfully challenged these requirements in court, localities that accept funds with these conditions could face FCA liability if federal officials later determine they failed to meet cooperation standards.
“We’re seeing a multi-pronged approach to using funding mechanisms as leverage for immigration enforcement cooperation,” notes former federal prosecutor James Wilson. “The FCA provides a powerful enforcement tool because it allows for treble damages and significant penalties for non-compliance.”
Legal experts advise federal contractors and grant recipients to take proactive measures to mitigate these emerging risks. This includes comprehensive reviews of all certifications made to the government, thorough audits of immigration verification procedures, and careful consideration of whether to accept funds with new immigration-related conditions.
“Early risk assessment and compliance verification can prevent costly investigations and potential FCA actions,” says government contracts attorney Susan Chen. “Organizations should document their compliance efforts thoroughly and consider consulting with specialized counsel to navigate these complex requirements.”
As this enforcement trend continues to develop, affected organizations must stay alert to policy changes and court decisions that may impact their compliance obligations and potential liability exposure under the False Claims Act.
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8 Comments
This is a rather novel use of the False Claims Act to address immigration issues. It will be important to monitor how this plays out and whether it leads to a broader pattern of enforcement actions against federal contractors.
This expanded application of the False Claims Act is a significant development. It will be interesting to see how it impacts federal contractors going forward and whether it leads to a broader crackdown on immigration issues.
The settlements against Bayonne Drydock and another contractor highlight this growing pattern of enforcement. It’s clear the administration is taking a hard stance on immigration-related issues, even within the context of federal contracts.
Prime contractors will have to be very vigilant to ensure their own compliance as well as that of their subcontractors. Failure to do so could potentially expose them to False Claims Act liability.
Interesting shift in enforcement priorities by the Trump administration. Seems they’re using the False Claims Act to target immigration compliance issues among federal contractors. Quite a significant change in tactics.
This approach could create substantial new liability risks for organizations that receive federal funding. Contractors will need to be very diligent in monitoring their own and their subcontractors’ compliance with E-Verify requirements.
The administration’s reinterpretation of the False Claims Act to target immigration compliance is a notable shift in strategy. It will likely create compliance headaches for many federal contractors and grant recipients.
Organizations need to ensure they have robust processes in place to verify the immigration status of their workers, both directly employed and through subcontractors. Failure to do so could prove very costly.