The Department of Justice has announced a $17 million civil settlement with a federal contractor alleged to have engaged in discriminatory DEI practices in violation of the False Claims Act.

DOJ alleged that for more than seven years, the contractor:

  • Used protected characteristics in compensation decisions, including “diversity modifiers” linking incentive pay to demographic targets;
  • Used race, color, national origin, and sex as interview eligibility criteria through “diverse slate” initiatives; and
  • Restricted access to some training, mentoring, educational and leadership-development opportunities based on race or sex.

Notably, DOJ cited the equal opportunity clause formerly required by Executive Order 11246 and Title VII of the Civil Rights Act as legal authorities, even though historically neither has been used to trigger FCA liability.

DOJ characterized this as the first resolution under its Civil Rights Fraud Initiative. It signals DOJ’s willingness to use the FCA — traditionally a procurement fraud tool — to pursue alleged employment discrimination theories.

Members of the Center for Workplace Compliance (CWC), our affiliated nonprofit membership association, can read more here. CWC’s DEI Risk Assessment Package may help employers to identify and mitigate risk.