In light of DOJ’s stated priorities, federal contractors and private employers (100 or more employees) should take proactive steps to mitigate FCA exposure tied to discrimination risks.
- Conduct a Privileged Internal Review
Review hiring, promotion, compensation, mentorship, and training programs under attorney-client privilege to assess whether any practices could be interpreted as steering decisions based on protected characteristics. - Examine Compensation and Incentive Structures
Ensure that performance bonuses or executive compensation are not tied to demographic outcomes in a way that could create pressure to make employment decisions based on protected traits. - Review Documentation and Certifications
Federal contractors must carefully review and align their employment practices with the certifications they make to the government. New contract clauses, including H-050 and H-051, require contractors to affirm that compliance with federal anti-discrimination laws is material to the government’s payment decisions and that they do not engage in employment practices, such as certain DEI initiatives, that grant preferences based on protected characteristics. These provisions elevate compliance from a policy matter to a payment condition, meaning that inaccurate certifications or misalignment between stated policies and actual practices may trigger significant exposure under the False Claims Act. - Audit Hiring and Promotion Patterns
Use internal analytics to identify statistically significant disparities or anomalies that could trigger government scrutiny. Investigate and document legitimate, nondiscriminatory explanations where applicable. - Align Policies with Practice
Compare:
• Workforce Analytics related to Title VII, Section 503, and VEVRAA compliance
• EEO-1 reports
• Internal policy statements
• Actual implementation in the field
Discrepancies between “paper compliance” and operational reality can create FCA risk. - Train Managers on Merit-Based Decision-Making
Supervisors should understand that employment decisions must be grounded in objective qualifications and documented performance criteria. - Consider Voluntary Remediation Where Necessary
DOJ has signaled that cooperation and remediation may be considered mitigating factors in enforcement decisions.
A Rapidly Evolving Enforcement Landscape
DOJ leadership has made clear that FCA enforcement will remain robust and adaptable. Discrimination-based FCA theories represent an expansion of traditional fraud enforcement into employment practices, particularly in the federal contracting space.
For contractors and employers with 100 or more employees, now is the time to:
• Reassess hiring and compensation systems
• Confirm alignment between compliance certifications and operational practices
• Strengthen documentation and defensibility
The intersection of discrimination law and FCA liability represents one of the most significant compliance developments in recent years. Proactive review today may prevent costly investigations tomorrow.
Our EO 14173 Contractor Compliance Checklist provides a comprehensive framework to help you adapt your affirmative action and DEI efforts while staying compliant with evolving federal requirements. Take control of your compliance strategy. Missteps can lead to audits, contract loss, or False Claims Act exposure.