The Trump administration’s use of a Civil War-era statute to investigate DEI programs at major corporations signals a significant crackdown on what it deems discriminatory hiring practices.
Story Highlights
- The DOJ leverages the False Claims Act to probe DEI initiatives at Google and Verizon.
- DEI programs are framed as potential fraud under federal contracts.
- Attorney General’s guidance identifies unlawful DEI practices.
- Federal contractors face compliance challenges amid ongoing investigations.
DOJ Targets DEI Programs with Historic Fraud Law
The U.S. Department of Justice (DOJ) under President Trump is utilizing the False Claims Act (FCA), a statute from the Civil War era, to launch investigations into diversity, equity, and inclusion (DEI) programs at corporations such as Google and Verizon. The DOJ alleges these companies misrepresented their compliance with neutral hiring standards while benefiting from federal contracts. This novel application of the FCA marks an escalation from previous federal agency practices to now targeting contractors directly.
Guidance from Attorney General Shifts Enforcement
In July 2025, the Attorney General issued a memo outlining “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination.” This document specifies practices deemed illegal under DEI initiatives, such as quotas and race-based employee resource groups (ERGs). The guidance applies not only to grant recipients but also signals risks for all employers, suggesting a broad interpretation of DEI as potentially discriminatory fraud.
The Trump administration has aggressively pursued an agenda prioritizing merit-based hiring over identity metrics, viewing DEI as a violation of antidiscrimination laws like Title VII. This shift has placed federal contractors in a challenging position as they navigate compliance with both state and federal regulations.
Impacts on Corporations and Broader Industry
The DOJ’s actions have immediate and long-term implications for corporations, particularly those dependent on federal contracts. Companies are reviewing hiring materials and eliminating quotas to avoid potential FCA violations. This move could result in a chilling effect on inclusion efforts, as organizations prioritize skills and performance over diversity metrics.
The broader industry, including employers not directly targeted by the DOJ, is also adapting by adopting “Best Practices” to ensure compliance and avoid legal scrutiny. While the DOJ’s efforts reinforce merit-based hiring, critics argue that this approach undermines efforts to foster diversity and inclusion within the workplace.
Sources:
Illegal DEI: New DOJ Guidance and Its Implications for All Employers
DOJ Leverages Civil War-Era Fraud Statute to Probe DEI Initiatives at Google, Verizon, Defense Firms
Trump Administration Reviews Corporate Diversity Initiatives Under Federal Fraud Law
