The Trump administration has amplified its enforcement actions against diversity, equity, and inclusion (DEI) initiatives within some of America's largest corporations. In an unprecedented move, the Department of Justice (DOJ) has issued civil investigative demands to industry giants, including tech behemoth Google and telecommunications leader Verizon, demanding a turnover of internal documents. These documents pertain to hiring and promotion policies that factor in race, ethnicity, or national origin, potentially contravening federal guidelines.
These probes, which are being conducted under the False Claims Act—a statute typically reserved for combating fraud against the federal government—represent a significant shift in the federal oversight of workplace practices linked to government contracts. The DOJ posits that companies with federal contracts might be defrauding the government if they adhere to DEI considerations after President Donald Trump's executive orders that ban what the administration deems discriminatory race- and sex-based preferences in government-related work.
The scope of the investigations extends beyond the tech and telecommunications sectors, encompassing companies in the automotive, pharmaceutical, defense, and utilities industries, among others. This has led to some corporate representatives meeting directly with DOJ officials as inquiries intensify.
Traditionally, False Claims Act cases have stemmed from whistleblower complaints or findings by internal watchdogs. However, these DEI-focused investigations were initiated by politically appointed officials within the DOJ, who argue that federal contractors are not fulfilling their legal obligations by maintaining diversity-based employment programs.
In a May enforcement memo, Deputy Attorney General Todd Blanche directed the DOJ "to investigate and, as appropriate, pursue claims against any recipient of federal funds" that knowingly engages in preferences based on race, ethnicity, or national origin. Blanche referred to the False Claims Act as the "weapon" to be used against corporations and educational institutions that "continue to adhere to racist policies."
This aggressive stance is part of President Trump's swift actions upon his return to office in January. Within hours of his inauguration, Trump signed executive orders dismantling DEI programs across federal agencies and directed contractors to end what his administration calls "illegal DEI discrimination." The orders mandated that hiring and evaluations be based strictly on merit, skills, and performance.
To reinforce these directives, the DOJ launched the "Civil Rights Fraud Initiative," signaling its intent to pursue contractors and grant recipients failing to comply. Assistant Attorney General for Civil Rights Harmeet Dhillon conveyed a stark warning during Senate Judiciary Committee testimony, stating, "Either DEI will end on its own, or we will kill it."
The use of the False Claims Act to advance policy objectives is unusual but potentially devastating for businesses. The statute allows the government to seek triple damages, which could mean financial penalties amounting to millions of dollars. Additionally, the DOJ is incentivizing whistleblowers to file suits on the government's behalf, offering them a share of any recovery.
The mere possibility of an investigation has already caused apprehension within corporate America. Dozens of major companies have scaled back or scrapped DEI programs for fear of lawsuits, reputational damage, and the loss of federal contracts. Legal experts note that even companies confident in their legal positions face significant business risks by becoming DOJ targets.
The administration's recent actions put DEI at the heart of an escalating legal and political confrontation, signaling a broader attempt to reshape corporate America's approach to hiring and promotion.
