As many have anticipated, the U.S. Department of Justice (DOJ) announced the Civil Rights Fraud Initiative on May 19, 2025. This Initiative empowers U.S. Attorneys to bring lawsuits under the False Claims Act (FCA) against federal contractors and employers who receive federal funds if the DOJ determines their Diversity, Equity, and Inclusion (DEI) policies violate federal civil rights laws. Specifically, the Initiative targets companies that utilize DEI policies or practices that “assign benefits or burdens on race, ethnicity, or national origin.”
The Initiative also encourages whistleblowers to come forward using a mechanism called a qui tam action, which gives private individuals the ability to sue companies on the government’s behalf and receive a portion of any recovery.
Why This Initiative Matters
The DOJ has made clear that it will investigate and pursue lawsuits under the FCA against contractors and organizations that receive federal funds and are found to violate federal civil rights laws.
A federally funded employer or contractor who is found to violate the FCA faces threats of regulatory enforcement or whistleblower lawsuits with exposure to treble damages and additional monetary penalties.
For businesses in Florida that rely on federal grants, contracts or reimbursements (including in education, healthcare, defense and infrastructure), and maintain DEI policies, they can become a target under the DOJ’s approach.
Who Is at Risk?
This policy applies broadly to employers who fall into one of the below categories and who have certified to the federal government compliance with federal civil rights laws:
- Federal contractors
- Federal grant recipients
- Organizations receiving federal funds
If you fall into one of these categories and have DEI policies that take race, ethnicity, or other protected characteristics into account, especially when making employment decisions, you may face both civil rights scrutiny and False Claims Act liability.
What You Should Do Now
With strategic planning and legal guidance, you can stay compliant, protect your operations, and continue safely building an inclusive culture. Here are some steps you can take:
- Conduct a compliance review. If you have not already, determine if your DEI policies or related HR practices trigger liability under the FCA or other civil rights laws by improperly taking race, ethnicity, or other protected characteristics into account in employment.
- Audit your certifications. Ensure all statements of compliance with civil rights laws are accurate and current.
- Train your team. Be sure your personnel understand the implications of this Initiative and how to respond to whistleblower allegations and government inquiries.
- Be proactive. Identify and rectify areas of potential exposure.
- Consult legal counsel. Seek guidance in revising company policies, training personnel, and ensuring policies are race-neutral and compliant.
If you are a federal contractor or a recipient of federal funds and have not yet had legal counsel review your policies and practices to ensure compliance with civil rights laws, now is the time.
Our Labor & Employment team can help you evaluate and update your policies and practices to ensure compliance with the law and minimize potential exposure under the FCA.
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This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.
About Gunster
Gunster, Florida’s law firm for business, provides full-service legal counsel to leading organizations and individuals from its 13 offices statewide. Established in 1925, the firm has expanded, diversified and evolved, but always with a singular focus: Florida and its clients’ stake in it. A magnet for business-savvy attorneys who embrace collaboration for the greatest advantage of clients, Gunster’s growth has not been at the expense of personalized service but because of it. The firm serves clients from its offices in Boca Raton, Coral Gables, Fort Lauderdale, Jacksonville, Miami, Naples, Orlando, Palm Beach, Stuart, Tallahassee, Tampa, Vero Beach, and its headquarters in West Palm Beach. With more than 320 attorneys and consultants, and 300 committed support staff, Gunster is ranked among the top 200 largest law firms by the National Law Journal and has been recognized as one of the Top 100 Diverse Law Firms by Law360. More information about its practices, industries, offices and news is available at www.gunster.com.
