On May 19, 2025, the Department of Justice (DOJ) announced its Civil Rights Fraud Initiative, outlining its plan to use the civil False Claims Act (FCA) to investigate and pursue claims against those who "certify compliance with civil rights laws while knowingly engaging in racist preferences, mandates, policies, programs, and activities, including through diversity, equity, and inclusion (DEI) programs."
Companies — particularly those in defense, education, health care, manufacturing, and other industries with federal government contracts or receiving federal financial assistance (i.e., grants or cooperative agreements) — should connect with an attorney to evaluate their risk under this new initiative.
DOJ's Civil Rights Fraud Initiative
In its memorandum, available here, DOJ announced the launch of a new Civil Rights Fraud Initiative that will use the FCA to investigate and pursue cases against federal funding recipients in violation of civil rights laws. The Civil Rights Fraud Initiative could dramatically increase exposure for organizations with DEI policies or other internal programs that DOJ may view as in conflict with federal civil rights laws.
This enforcement effort will be co-led by the Civil Fraud Section (which traditionally handles FCA enforcement) and the Civil Rights Division. In addition, each of the 93 U.S. Attorney's Offices across the country will designate an Assistant U.S. Attorney to advance these civil rights-based FCA efforts. The Civil Fraud Section and the Civil Rights Division also will collaborate with the Criminal Division, key federal agencies — including the Departments of Education, Health and Human Services, Housing and Urban Development, and Labor — state attorneys general, and local law enforcement to enforce civil rights compliance among federal funding recipients.
The DOJ memorandum "strongly encourages" whistleblower (or "relator") lawsuits in this area. Such lawsuits are filed under the qui tam provisions of the FCA and allow private individuals to bring FCA claims on the government's behalf and potentially share in any monetary recovery. This pronouncement is likely to incentivize relators and their counsel to scrutinize internal and external DEI policies and programs, website language, and government certifications for perceived non-compliance.
Who Is at Risk?
Entities receiving federal funds — including private and public companies, universities, hospitals, contractors, and non-profits — may face scrutiny if their conduct is seen as violating civil rights laws, including but not limited to Title IV, Title VI, and Title IX of the Civil Rights Act of 1964, while certifying compliance to receive government funding.
The DOJ memorandum sets out examples of conduct that it asserts could give rise to FCA liability, including:
- Encouraging antisemitism or refusing to protect students from antisemitism;
- Allowing individuals to access restrooms inconsistent with biological sex;
- Requiring women to compete against men in athletics; and
- Implementing DEI policies that "assign benefits or burdens on race, ethnicity, or national origin."
The DOJ memorandum also asserts that some companies and educational institutions have made "cosmetic changes" to camouflage their continued adherence to DEI policies and preferences. Cosmetic changes do not suffice to ameliorate liability from unlawful practices.
What is the Risk?
FCA lawsuits — even those that lack merit — are expensive and time-consuming to defend. Potential consequences include:
- Extensive legal fees
- Business disruption and reputational damage
- Internal investigations and audits
- Treble damages and penalties ranging from $14,308 to $28,618 per claim if liability is established
The mere initiation of an FCA investigation can divert valuable time and resources away from business operations, and many companies choose to settle such cases rather than await their day in court.
DOJ's memorandum is not binding law, and while it sets out enforcement priorities and allocates resources to those priorities, it does not change what the law is. Of course, not every program that promotes diversity, equity, or inclusion violates federal civil rights laws, and not every certification of compliance with federal civil rights laws is a violation of the FCA.
For an entity to be found liable under the FCA for falsely certifying compliance with civil rights laws, DOJ still would need to prove not only that the entity did not comply with federal anti-discrimination laws but also that the entity made the false certification knowingly, or with reckless disregard or deliberate ignorance, as to whether it was complying with federal anti-discrimination laws.
What Companies Should Do Now
To minimize risk, companies should take proactive steps to review and reassess existing DEI policies and practices to ensure they do not violate federal antidiscrimination laws:
- Review government contract certifications and compliance representations.
- Audit internal DEI programs, training materials, and hiring or admissions policies.
- Scrutinize external and internal websites and communications for language that could be construed as race- or gender-based preference. See Foley's prior article with guidance here.
These preventative steps are essential for any entity that receives federal funding.
If You Are Targeted: Engage Counsel First
If your company is subject to a whistleblower or internal concern, government inquiry, or Civil Investigative Demand, do not engage with the government before consulting experienced FCA counsel. Early interactions with the DOJ must be carefully handled to preserve privileges and prevent unintended admissions.
Conclusion
DOJ's Civil Rights Fraud Initiative represents a major shift in federal enforcement priorities — one that merges civil rights and procurement compliance under the powerful tool of the FCA. Companies must act now to reassess risk, update policies, and prepare for increased scrutiny.
Our Government Enforcement Defense & Investigations and Labor & Employment teams are closely tracking developments in this area and are available to assist with compliance reviews, policy assessments, and defense strategy.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
