DOJ’s Civil Rights Fraud Initiative: What Employers Need to Know

By: Lynn Clements, Senior Director, People Insights and Rachel Rubino, Managing Consultant, at Berkshire Associates*

In May 2025, the U.S. Department of Justice (DOJ) launched the Civil Rights Fraud Initiative, signaling a new enforcement era focused on using the False Claims Act (FCA) to hold federal fund recipients accountable for knowingly violating federal civil rights laws. The Initiative marks a fundamental shift: federal civil rights compliance is now tied directly to financial liability under the FCA. With enforcement actions already underway, employers should act now to understand their risk exposure, review DEI-related policies and materials, and ensure compliance with evolving federal requirements.

What is the Civil Rights Fraud Initiative?

When the DOJ issued a memo to staff announcing the creation of the Civil Rights Fraud Initiative, it made clear that the Trump Administration would rely heavily on the FCA – in addition to traditional EEO laws - to investigate and pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws. The Initiative is co-led by the Civil Division’s Fraud Section, which enforces the FCA, and the Civil Rights Division, which enforces civil rights laws. The memo also calls for collaboration with the DOJ’s Criminal Division, other federal agencies with civil rights enforcement authority (such as the Departments of Education, Health and Human Services, Housing and Urban Development, and Labor) and partnerships with state attorneys general and local law enforcement agencies to share information and coordinate enforcement actions. 

The creation of the Civil Rights Fraud Initiative stems from Executive Order 14173, which in addition to revoking Executive Order 11246 also created a new certification requirement for federal contractors. This new certification requires that contractors certify they do not operate any programs promoting DEI that violate federal non-discrimination laws, and that compliance with all applicable federal anti-discrimination laws is “material” to the government’s payment obligations for purposes of the FCA. When announcing the creation of the Civil Rights Fraud Initiative, the DOJ stated it would be relying on the FCA to investigate federal fund recipients who certified compliance with federal non-discrimination laws “while knowingly engaging in racist preferences, mandates, policies, programs, and activities, including through diversity, equity, and inclusion (DEI) programs that assign benefits or burdens on race, ethnicity, or national origin.”

What is the False Claims Act?

The FCA is a federal law which prohibits individuals and companies from “knowingly” providing false information or a false record for the purpose of obtaining payment from the federal government. The FCA defines “knowingly” as actual knowledge, deliberate ignorance or reckless disregard of the truth. In addition, the false information must be “material” to the government’s payment, which is why Executive Order 14173 includes an express requirement that federal contractors agree that compliance with all federal anti-discrimination laws is material under the FCA. 

Damages under the FCA can be significant and can include treble damages (three times the amount of actual damages) plus penalties. In fiscal year 2024, the DOJ recovered more than $2.9 billion in settlement and judgments involving fraud and false claims against the government. Importantly, the FCA also includes qui tam provisions, which allow a private citizen to file a lawsuit on behalf of the government under the FCA. If successful, the whistleblower receives a portion of the money recovered.

What are Civil Investigative Demand Letters?

As part of the Civil Rights Fraud Initiative, some federal contractors and grant recipients began receiving Civil Investigative Demand (CID) letters from the DOJ earlier this year. A CID is a legal tool used by the DOJ to gather information during civil investigations under the FCA, often before a lawsuit is filed. It is a powerful pre-litigation tool because CIDs allow the DOJ to demand documents, written responses, and oral testimony without needing court approval. The process for issuing CIDs is outlined by law at 31 U.S.C. Section 3733, and the DOJ can seek court enforcement if an organization fails to respond or otherwise cooperate.

Organizations receiving CIDs related to their compliance with EO 14173 are, understandably, holding them close to the vest. Initial targets are likely to be the types of organizations specifically identified for investigation under EO 14173, including publicly-traded corporations, large non-profit corporations or associations, foundations with assets over $500 million, state and local legal and medical associations, and higher education institutions with endowments over $1 billion. In terms of the type of information likely requested, employers should expect the initial requests to be broad, often covering a five or six-year period. 

Federal contractors and fund recipients can use guidance shared by the Federal government as well as state Attorneys General to assess their risk. In February 2025, the Department of Education’s Office for Civil Rights published a “Dear Colleague Letter” to all schools receiving federal financial assistance, outlining the types of practices, policies, and programs that could prompt investigation.  The letter focused on the use of race-based preferences and programs in student admissions and programming stating that “educational institutions may neither separate or segregate students based on race, nor distribute benefits or burdens based on race.”

In July 2025, Attorney General Pam Bondi issued additional guidance to federal fund recipients about unlawful DEI practices. The memo provides a detailed but non-exhaustive list of policies and practices that the DOJ considers inherently suspect if not outright unlawful, emphasizing that they may or may not be described as “Diversity, Equity, and Inclusion” (DEI). It warns against the continuation or implementation of programs that are “DEI by another name,” including the use of “proxy” characteristics that are meant to stand in for legally protected characteristics such as sex or race.

Additionally, some Attorneys General have publicly shared what concerns have prompted them to issue CIDs. In Indiana, for example, Attorney General Todd Rokita issued CIDs to both the University of Notre Dame and Butler University. The issuance of these CIDs followed earlier letters sent to both institutions in May 2025 requesting information about the institution’s DEI policies and practices. The initial letters from Attorney General Rokita asked for information on publicly available strategic plans and related initiatives stating a priority of increasing diversity among staff and students. Attorney General Rokita issued CIDs to both institutions after he determined the responses to his initial requests were insufficient in addressing his questions. 

How Should Federal Fund Recipients Prepare?

To prepare for a potential enforcement investigation under the FCA, organizations should be conducting comprehensive reviews of all employment-related programs and policies to identify areas of risk. Higher education institutions should also review their admissions practices for similar concerns. 

In the current Administration, many of the enforcement efforts appear to be based, at least in part, on publicly available information. Given this, it is crucial that organizations evaluate all public-facing materials. In the case of the Indiana schools discussed earlier, some of what caught the eye of the government was published strategic plans and institutional priorities that included “Diversity, Equity, and Inclusion” and references to initiatives created to increase the diversity of both staff and student populations. Federal contractors and grant recipients should conduct a self-audit of all publicly available materials, including websites, strategic reports and employee-facing publications, as well as resources and training available to employees. In addition, higher education institutions should review admissions and student programming practices. 

Organizations should also review historical information they have maintained either online or in hard copy. For example, are there old affirmative action plans available? If so, organizations will want to reconsider record retention requirements now that EO 11246 has been revoked. In requests that have been made public, it is not unusual for the government to ask for information that goes back five or six years, and institutions should spend time now assessing what work related to diversity, equity, and inclusion has been completed in the past, to help evaluate current risk. 

However, it may not be enough to review, or even update, written policies and procedures. Risk-adverse employers will also want to evaluate how any previous or new DEI-related policies and procedures have been implemented. This includes conducting statistical analyses of workforce data (and for higher education institutions, admissions data) to ensure compliance with federal and state civil rights laws. In other words, while one can easily eliminate policies and programs, the only way to know if practices are being implemented lawfully by decision makers is to study the data. Workforce data tells the story of what is actually happening, regardless of the existence or non-existence of formal policies. 

Workforce analytics also allow employers to efficiently evaluate individual employment decisions at scale. The number of hiring, promotion, termination and other employment decisions that can occur at an organization in any given period is vast. So too are the number of individual managers making those decisions. Regular review of workforce data allows employers to identify potential patterns of disparate treatment that might go undetected if not studied holistically. This is particularly true given that most companies do not have a centralized decision-making process. As a result, systematically studying how employment policies are being implemented is a key step in evaluating whether individual workers are being treated fairly without regard to their race, sex, national origin, or other protected traits. 

Organizations will especially want to evaluate how they might respond to requests for information in the following areas: 

• Programs with preferential treatment: Requests for documents and communications about programs that grant "opportunities, benefits, and advantages" based on protected characteristics like race or gender.

• Unlawful proxies: Demands for information on recruitment, hiring or promotion practices that use proxies to achieve a specific racial or ethnic composition, such as targeting specific geographic areas or institutions.

• Programs with unlawful segregation: Inquiries into any training sessions, student or employee orientation and development programs, or resources that separate or restrict access based on protected characteristics.

• Impermissible Use of Protected Traits in Decision-making: Requests about policies or programs that consider protected characteristics in selection or compensation decisions, such as admissions, hiring, promotions, financial aid and employee compensation.

• DEI training programs: CIDs likely ask about the content and scope of DEI training to determine if it promotes illegal discrimination or segregation. 

  
  

Finally, compliance professionals will want to engage with institutional leaders and key stakeholders to keep team members informed of new developments. All leaders should be aware of the FCA and the CID process. If a CID is received, legal counsel and other key institutional leaders should be engaged immediately. It is critical to have a cross-functional team of knowledgeable experts to help federal contractors and fund environments navigate this new compliance environment.

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* Berkshire Associate

s, a division of Resolution Economics, LLC, is a human resources and technology firm specializing in federal and state EEO compliance, pay equity, and workforce data analytics. With over 40 years of experience in the industry, Berkshire is among the most trusted names in the business.