Justice Department Uses Fraud Law To Target DEI At Google, Verizon
The US Department of Justice (DOJ) has opened investigations into diversity, equity, and inclusion (DEI) initiatives at several major companies, including Google and Verizon, The Wall Street Journal reports. The DOJ is using the False Claims Act to assess whether companies misrepresented their hiring or promotion practices while receiving federal funds.
DOJ Targets DEI Using Fraud Law
In a May memo from Deputy Attorney General Todd Blanche instructed prosecutors to investigate and pursue cases against federal funding recipients that knowingly engage in “preferences that create benefits or burdens based on race, ethnicity, or national origin.”
Blanche described the False Claims Act as a “weapon” for challenging what he characterized as discriminatory policies in both corporate and educational settings.
The False Claims Act has historically been used to pursue contractors who overbilled the government or failed to deliver promised goods or services. In this case, the DOJ is testing a new legal argument: that companies which consider race or ethnicity in employment decisions may be falsely certifying compliance with federal rules when they bid for or perform government contracts.
As part of the investigations, the DOJ has requested documents and information from companies across industries including technology, automotive manufacturing, pharmaceuticals, defense, and utilities. Some companies have already met with DOJ officials, the Wall Street Journal reports, citing people familiar with the matter.
False Claims Act lawsuits are costly
Legal experts note that applying the False Claims Act to workplace diversity programs is unusual and could prove difficult to defend in court. To succeed, prosecutors would need to show that companies knowingly misrepresented their employment practices when applying for government contracts and then submitted payment claims they should have known were inaccurate.
Still, if the government wins, the financial penalties could be significant. Under the False Claims Act, companies risk being liable for three times the damages the government alleges.
According to USA Today, the DOJ is encouraging whistleblowers to file DEI lawsuits on the government’s behalf and potentially receive a portion of the windfall. Last year, the DOJ took in nearly $3 billion in False Claims Act settlements and judgments.
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