The Blanche memo encourages use of the False Claims Act against federal contractors or grant recipients that “defraud the United States by taking its money while knowingly violating civil rights laws."
The stakes of illegal discrimination in the context of “DEI” have just gotten even higher.
On May 19, 2025, Deputy Attorney General Todd Blanche issued a memorandum concerning a “Civil Rights Fraud Initiative” and announcing it would “utilize the False Claims Act to investigate and, as appropriate, pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws.”
The Blanche memo encourages use of the False Claims Act (FCA) against federal contractors or grant recipients that “defraud the United States by taking its money while knowingly violating civil rights laws.” According to the memo, a federal contractor or grant recipient may implicate the FCA if it “knowingly violates civil rights laws … and falsely certifies compliance with such laws.”
The FCA is the U.S. government’s primary enforcement tool in connection with recipients of federal funds. The FCA affords the government with broad powers that can result in lengthy and wide-ranging investigations and enormous potential liabilities, which can include treble damages and significant per claim penalties.
The Blanche memo goes one step further, encouraging private parties to file qui tam actions:
The Department recognizes that it alone cannot identify every instance of civil rights fraud. Congress likewise has recognized as much and, as a result, has authorized private parties to protect the public interest by filing lawsuits and litigating claims under the False Claims Act-and, if successful, sharing in any monetary recovery. See 31 U.S.C. § 3730. The Department strongly encourages these lawsuits.
It is only a matter of time before the plaintiffs’ bar joins the party.
For these reasons, employers who receive federal funding, whether directly or indirectly and whether by contract or grant, need to be thoughtful before signing any certification of compliance with federal laws that may be viewed to include an expressed or implied certification of compliance with federal civil rights laws. Indeed, before making any such certification, employers should ensure that compliance processes are in place to validate that the basis for such certification is accurate and supportable. Such employers should evaluate their potential exposure for unlawful advantages (preferences), disadvantages (exclusions) or divisions (segregation) based on sex, race or other Title VII protected characteristics and then take remedial action as may be appropriate.
There are benefits to having such evaluation conducted under attorney-client privilege. However, employers who receive federal funding also should maintain a robust nonprivileged body of compliance documents about their processes and bases for their assessments.
The recommended evaluation of an employer’s programs for “unlawful DEI” is not limited to recipients of federal funds who are asked to sign a certification. A claim can be brought under the FCA even if the organization has not signed a certification. Indeed, the recommendation is not limited to federal funding recipients because the EEOC has made clear that one of its top priorities is to focus on illegal discrimination in the context of diversity, and the EEOC’s jurisdiction is not limited to federal contractors or grantees.
For More Information
If you have any questions about this Alert, please contact Jonathan A. Segal or any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group regarding "DEI" programs; Daniel R. Walworth, Christopher H. Casey or Katherine D. Brodie regarding False Claims Act compliance; or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.