With a panel on “Illegal DEI as an FCA Trigger?” addressed by Deputy Assistant Attorney General Brenna Jenny, this year’s Federal Bar Association’s annual Qui Tam Conference provided insight into the Department of Justice’s ongoing efforts to leverage the False Claims Act. Kim Hendon, Affirmity Vice President of Sales, has reviewed law firm reporting on the event to learn what federal contractors need to know.
A Recap: The DOJ’s False Claims Act Plans to Date
Back in October 2025, we considered reports that the DOJ was sending Civil Investigative Demand letters (CIDs) to certain organizations, which would allow the DOJ to demand access to DEI program documents, employee data, and to interview relevant company personnel.
Though we remarked at the time that “the DOJ’s use of the FCA in this way is as yet untested,” we nonetheless advised that any organization finding itself to be the recipient of a CID letter should bring it to the attention of legal counsel “as a matter of urgency.”
We additionally noted that the FCA allows private citizens to file “qui tam” suits on behalf of the government, and that such suits are essentially incentivized by the fact that those who bring them may receive a portion of what the government recovers. As noted in reporting from Miller & Chevalier, there was a record number of such lawsuits initiated in FY 2025.
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What We Now Know About Current DOJ Activity via “Illegal DEI as an FCA Trigger?”
In their write-up, Morgan Lewis describes the “tenor” of DAAG Brenna Jenny’s remarks as “telegraphing that the DOJ is fully committed to investigating and pursuing False Claims Act cases against federal contractors for violations of anti-discrimination laws or regulations.” It contrasts this with “the defense bar’s skepticism as to the legal viability of such cases” and warns that federal contractors can expect enforcement activity to continue unabated.
Despite the name of the session (prompted by the emphasis of early 2025 executive orders such as EO 14173), Jenny de-emphasized “DEI” as an indicator of anti-discrimination violations. Essentially, it was acknowledged that having a DEI program didn’t necessarily constitute illegal discrimination and that illegal discrimination may still exist in the absence of a DEI program.
The Morgan Lewis reporting confirms that the current Civil Rights Fraud Initiative is focused on potential race and sex discrimination by corporate government contractors, and that investigations are being initiated directly by the DOJ as well as via qui tam complaints.
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Examples of Contractor Behavior Being Targeted
Holland & Knight’s coverage includes a recap of examples of alleged improper conduct that the DOJ flagged at the conference. The law firm suggests that these examples should be treated “as indicators of DOJ’s current enforcement priorities” and prompts contractors to assess their similarity with their own policies and practices.
The examples given included:
- Programs that the DOJ views as pressuring race- or sex-based decision making. Three different forms of pressure were described:
- Creating and tracking goals for hiring or staffing programs based on protected characteristics. Jenny objected to dashboards tracking hiring and staffing demographics using traffic light colors to show when “demographic targets” are and are not met.
- Tying financial incentives to demographic characteristics and outcomes. Jenny claimed that the DOJ had heard from someone in a supervisor role who reported being “required to award bonuses to team members solely because of their race”. She also took aim at the practice of tying the supervisor’s own compensation to meeting DEI-related metrics.
- Requiring employees to develop personal DEI goals that input into performance reviews. This was criticised as creating a system “where employees face adverse consequences for failing to advance company demographic objectives”.
- Executive training programs that restrict participation based on race or sex. Jenny noted that such programs are often marketed internally as offering special opportunities that enhance advancement prospects. By explicitly offering these only to certain groups, the DOJ believes those outside such groups are being denied the same pathways to promotion.
- Diverse-slate requirements and two-tiered hiring standards. The DOJ is focused on uncovering situations where employers relax or waive standards for candidates from certain protected classes.
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The DOJ’s View on the Legal Basis for Its Civil Rights Fraud Initiative
During the panel, the Deputy Assistant Attorney General set out how the DOJ plans to argue its cases. As explained at length in Morgan Lewis’ reporting, she referenced the four key elements of a False Claims Act—falsity, materiality, scienter, and damages—and explained how the DOJ believes that when a contractor violates anti-discrimination laws, it satisfies those elements.
- Falsity:Requires a defendant to have made a false statement of material fact, or have omitted a material fact in a way that renders their statements misleading. Jenny described the DOJ’s best cases for falsity as those “in which policy pressure resulted in decisions being made because of race, sex, or other improper characteristics.”
- Materiality: Requires that government payment decisions be made on the basis of material falseholds. Holland & Knight notes that commentator’ doubts have focused on this particular condition, something that Jenny pushed back on during the panel. The DOJ’s view is that “antidiscrimination compliance reflects a material policy decision about how taxpayer funds can and should be used.”
- Scienter: Requires a defendant to have acted with intent to deceive, manipulate, or defraud. The Deputy Assistant Attorney General described some cases having direct evidence of intentional discrimination (e.g. written directives to hire a certain number of people of a certain group). The DOJ will also look for evidence of deception, with the example given being a business stating that preferential treatment based on race is prohibited, while managers are simultaneously verbally claiming that members of particular groups need to be hired.
- Damages: Requires the plaintiff to prove that the defendant’s falsehoods caused an actual economic loss. Jenny explained that the DOJ would continue to apply the traditional assessment factors (cooperation, self-disclosure, and length and scope of misconduct)
How Can Federal Contractors Prepare?
As we emphasized back in October 2025, organizations that receive a Civil Investigative Demand (CID) letter—usually considered a prelude to litigation under the FCA—should immediately consult their legal counsel.
Otherwise, organizations should proactively assess their historical and current programs and ensure they remain in compliance with existing laws, while being mindful of the DOJ’s current priorities. The following laws remain relevant to your efforts:
- 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
Affirmity can help federal contractors prepare with a range of software and services, including:
- DEI Risk Assessment Services: Discover potential legal and reputational risks with a full attorney-client privileged assessment of your program, all while continuing to deliver on your employee engagement and inclusion priorities. See also our full range of risk assessment services.
- Workforce Analytics and Benchmarking Analysis: Use proven affirmative action-style methodologies to comply with Title VII and other equal employment opportunity laws. Our tools and methodologies help you understand the representation of all race and sex-based groups in your organization within the wider context of available talent.
- Talent Decisions Software Module: Make compliance continuous, defensible, and seamlessly integrated into everyday decision-making with this critical component of Affirmity’s Workforce Analytics platform.
- Workforce Compliance Solutions: For VEVRAA and Section 503 affirmative action plans, as well as EEO-1 and VETS-4212 reporting and state-level reporting.
Protect your organization against the DOJ’s False Claims Act push and learn more about what Affirmity has to offer: Contact our team of experts today.
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.