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The Trump administration has opened investigations into diversity initiatives used in hiring and promotion at major U.S. companies, according to a report published Sunday by The Wall Street Journal.
Google and Verizon are among the companies that have received Justice Department demands for documents and information related to their workplace programs, the Journal reported. Other companies under scrutiny include firms in the automotive, pharmaceutical, defense and utilities sectors, and some have met directly with Justice Department officials.
President Donald Trump moved quickly after taking office in January to dismantle federal diversity, equity and inclusion programs and to discourage their use in the private sector and in education.
The civil investigations are being conducted under the False Claims Act, a law traditionally used to target contractors who bill the government for work not performed or who inflate costs. The Justice Department is now arguing that companies holding federal contracts while considering diversity in hiring may be committing fraud against the government, potentially exposing them to claims worth millions of dollars.
False Claims Act cases are typically triggered by whistleblowers or internal government watchdogs. The DEI investigations were initiated by politically appointed Justice Department officials who contend that contractors are not meeting their obligations if they continue to use diversity-based policies, according to the Journal.
In a May enforcement memo, Deputy Attorney General Todd Blanche directed the department “to investigate and, as appropriate, pursue claims against any recipient of federal funds” that knowingly engages in preferences creating benefits or burdens based on race, ethnicity, or national origin.
Blanche wrote that the department would seek to penalize private companies and educational institutions with government contracts if they continued to use DEI policies after Trump issued an executive order ending what he described as discriminatory race- and sex-based preferences in government work.
Legal experts said it is unusual for the anti-fraud statute to be used to advance broader policy goals. Companies are reassessing their employment practices in response to the administration’s position.
President Trump’s executive orders have also targeted DEI efforts in the federal government, pushing back on the previous administration’s efforts.