We’ve previously written about how the DOJ is looking to root out “illegal DEI” among government contractors. One tool the DOJ is using is the False Claims Act (FCA). Normally, the FCA is used to combat financial fraud among federal contractors, but the DOJ has taken a novel interpretation to target DEI. A recent Freshfield’s memo breaks down how the DOJ may use the FCA to enforce against DEI programs:
“In the DEI context, this framework theoretically empowers the government to pursue enforcement against contractors that certify compliance with federal law but engage in practices the administration considers to be ‘illegal DEI.’
From a compliance perspective, this development means companies that receive federal funds should ensure that legal, contracting, and HR or employment teams are coordinated. Among other things, recipients of federal funds may face information demands or audits of DEI programs, raising the potential for both Title VII and FCA risk.”
While the memo notes that 2025 saw little DEI-related enforcement, 2026 could be different. With midterm elections on the horizon, the administration will look to make a statement on one of its primary campaign promises. Additionally, 2025 marked the beginning of new litigation strategies and investigations that may bear fruit in courtrooms in 2026. Right now, the rules about what constitutes “illegal DEI” are unclear. However, this ambiguity may favor defendants in any resulting litigation. Companies, especially those working with the US government, should review their DEI programs and policies.
Our members can learn more about ESG litigation here.
Members also save hours of research and reading time each week by using our filtered and curated library of ESG/sustainability resources covering over 100 sustainability subject areas – updated daily with practical and credible information compiled without the use of AI.
If you’re not already a member, sign up now and take advantage of our no-risk “100-Day Promise” – during the first 100 days as an activated member, you may cancel for any reason and receive a full refund. But it will probably pay for itself before then.
Practical Guidance for Companies, Curated for Clarity.
