A picture of how the Department of Justice intends to pursue organizations that practice “illegal DEI” is emerging, with reports that the agency is sending letters relating to the False Claims Act. In this article, we look at what organizations can expect, the potential penalties, and how to proactively prepare for the new landscape of DEI risk.
Background: The Presumed Wind-Down of the OFCCP and the Department of Justice’s Pursuit of “Illegal DEI”
As most readers will know, the Office of Federal Contract Compliance Programs (OFCCP) was essentially the Executive Order 11246 oversight agency, administering and enforcing the prohibition of employment discrimination based on race and gender. With 11246 gone, Section 503 of the Rehabilitation Act of 1973 and VEVRAA are the main remaining components of the agency’s remit.
Though the OFCCP’s processing of Section 503 and VEVRAA compliance reviews and complaint investigations was resumed in July, the OFCCP’s days are presumed numbered. The Department of Labor’s 2026 budget suggested that VEVRAA will likely be transferred to the VETS (Veterans Employment and Training Service) office, and Section 503 to the EEOC.
Though organizations may no longer have to expend resources on OFCCP compliance, there will still be legal battlegrounds on which workforce analytics and external consultancy will be essential. For starters, rendering the OFCCP defunct is just the first concrete act in the current administration’s broader pursuit of diversity, equity, and inclusion programs.
In addition to speaking against what it called “illegal DEI”, Executive Order 14173 noted some ways in which it intended to go about “Encouraging the Private Sector to End Illegal DEI Discrimination and Preferences.” This included:
“A plan of specific steps or measures to deter DEI programs or principles (whether specifically denominated “DEI” or otherwise) that constitute illegal discrimination or preferences. As a part of this plan, each agency shall identify up to nine potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of 500 million dollars or more, State and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars.”
This is where the False Claims Act (FCA) comes into play. Back in May 2025, we learned that the Justice Department intends to leverage the FCA to go after recipients of federal funds who violate federal civil rights laws. With regards to DEI, the DOJ would look for instances where organizations have certified that they do not operate DEI-promoting programs that violate any applicable Federal anti-discrimination laws. This certification measure was already suggested in EO 14173.
DOWNLOAD A PRACTICAL RESOURCE | ‘Your Post-EO 11246 Non-Discrimination Best Practice Checklist’
What the DOJ’s Use of the False Claims Act Looks Like
As reported by a number of legal firms, the DOJ has begun issuing Civil Investigative Demand letters (CIDs) to federal contractors and grantees. These CID letters are usually sent to an organization’s senior leadership or its legal department. In this context, they will allow the DOJ to demand access to DEI program documents, employee data, and relevant company personnel for interview purposes.
This use of CID letters is considered a prelude to litigation under the FCA. Because of this, if your organization receives a CID letter, it should be brought to the attention of legal counsel as a matter of urgency.
The DOJ’s use of the FCA in this way is as yet untested, but it nonetheless requires your attention. If the DOJ is able to make an FCA violation stick, the impact on your organization could be substantial.
- Organizations prosecuted under the FCA are liable for three times the government’s damages, plus an inflation-linked penalty (as of July 3, 2025, a maximum of $28,619).
- FCA liability applies when someone “knowingly submits, or causes to submit, false claims to the government”. However, the definition of “knowingly” does not require actual knowledge: deliberate ignorance or reckless disregard also qualify.
Critically, the use of CID letters is just one potential vector for the DOJ to leverage the False Claims Act against organizations. The FCA also allows private citizens to file “qui tam” suits on behalf of the government. Such suits could come from employees, former employees, or rejected applicants. And considering that those who bring qui tam actions may receive a portion of what the government recovers, it seems likely that more than a few investigations and lawsuits will begin this way.
LEARN MORE ABOUT RELATED DOJ GUIDANCE | ‘Justice Department Releases Guidance for Federal Contractors Regarding Unlawful Discrimination and “Illegal DEI”’
How Affirmity Can Help: Our Products for Proactively Assessing and Managing Risk
Once again, we would like to emphasize that if you receive a CID letter, your first port of call should be your legal counsel. Subsequently, if you are an Affirmity client, we will be happy to assist you with any aspect of your chosen response to the DOJ.
For everyone else, it’s important to take a wider view here: it’s likely that for the immediate future, the DOJ will be concerned with testing the waters rather than going all-in on issuing CID letters to every possible target. This presents a significant opportunity to get ahead of the anti-DEI push and proactively shore up your activities against not only False Claims Act lawsuits, but also the wide range of other legal actions that could be brought against you.
Remember, all of the following laws remain additionally relevant (and that this list is by no means exhaustive):
- Title VII of the Civil Rights Act of 1964
- Equal Pay Act of 1963
- Americans With Disabilities Act (ADA) 1990
- Age Discrimination in Employment Act (ADEA) of 1967
- Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA)
- Section 503 of the Rehabilitation Act
WHY DATA COLLECTION AND ANALYSIS REMAIN CRITICAL | ‘The Strategic Case for Collecting and Analyzing Workforce Demographic Data’
Affirmity offers a range of services and software solutions that will help you prepare for the new compliance risk landscape. Below we’ve listed some relevant areas and details of how we can assist you:
DEI Risk Assessment Services
Why it matters: Given the Department of Justice’s intention to pursue organizations practicing “illegal DEI” using the False Claims Act, you will need to take steps to ensure that your employee engagement programs fully align with the latest federal non-discrimination laws.
How Affirmity Can Help: Affirmity will collaborate with your teams and legal counsel to conduct a full attorney-client privileged assessment of your program’s potential legal and reputational risks while safeguarding the inclusive objectives and long-term business value of your current efforts.
Learn More About Our DEI Risk Assessment Services
AI System Compliance Risk Assessment
Why it matters: Organizations are increasingly incorporating Artificial Intelligence (AI) systems into their employee selection procedures. While powerful, these systems lack transparency, and it can be difficult to establish selection validity while proving that such automated decisions are free of bias. Organizations must ensure that their systems do not violate existing civil rights laws and the emerging wave of AI-focused legislation—including California’s recent amendments to its Fair Employment and Housing Act (FEHA).
How Affirmity Can Help: Affirmity will examine your AI tool, your current organizational use, supporting documentation, policies, and usage statistics to determine the defensibility of your selections. The assessment will be supported by adverse impact assessments at various stages of the selection process. This reduces your compliance risk, increases your legal defensibility, and improves the overall efficacy of your AI use.
Non-Discrimination Best Practices Assurance
Why it matters: Anti-discrimination laws, such as Title VII of the Civil Rights Act and the Equal Pay Act, still exist and prohibit discrimination based on race, sex, religion, national origin, and sex-based wage discrimination.
How Affirmity Can Help: We provide workforce analytics solutions that help uncover equity, fairness, and legal vulnerabilities by identifying demographic representation gaps and pay equity risks. Our solutions pinpoint trends in employee selection decisions made in the hiring, promotion, termination, and compensation processes to detect and correct human-based or process-based bias before it becomes a liability.
Section 503 and VEVRAA Compliance
Why it matters: Section 503 and VEVRAA mandates are still active and enforceable.
How Affirmity Can Help: We help clients maintain affirmative action programs for individuals with disabilities and protected veterans, including outreach, accommodations, and documentation.
State-Level Compliance and Training Support
Why it matters: State regulations and workforce training are critical components of compliance.
How Affirmity Can Help: Our support includes guidance on state-level mandates and access to training solutions that reinforce inclusive practices across all levels of the organization.
Learn More About Our Workforce Compliance Solutions
FURTHER READING | ‘Why Affirmative Action Should Still Be On Your Agenda: When Is an AAP Required at the Federal and State Level?’
Benchmark-Driven Reporting
Why it matters: Benchmarking enables organizations to contextualize their workforce performance against industry standards.
How Affirmity Can Help: Our analytics are benchmarked against national workforce trends and peer organizations, helping clients set realistic, equitable goals and measure progress effectively.
Discover Workforce Analytics and Benchmarking Analysis
Data Integrity and Reconciliation
Why it matters: Accurate workforce data is foundational for any compliance, risk, or strategic initiative.
How Affirmity Can Help: We ensure accurate, complete, and reconciled datasets across HRIS, ATS, and payroll systems—which is critical for audits, litigation defense, and investor due diligence.
Explore Compensation and Pay Equity Analysis
Prepare your non-discrimination efforts for future scrutiny. Please get in touch to learn more.
About the Author
Kim Hendon oversees account management and sales for Affirmity. She is responsible for building successful, long-term partnerships with clients and generating new business. Having served with the company for more than 25 years, Ms. Hendon has in-depth knowledge and broad experience in all areas of workforce analytics and HR compliance. Ms. Hendon assists clients with the planning and development of workforce compliance and non-discrimination programs, as well as employee engagement initiatives. She holds a Bachelor of Arts in Speech Communication and a Master’s in Business Administration. Connect with her on LinkedIn.