DEI, the False Claims Act, and the New Enforcement Reality for Employers

National Law Review article published this week highlights a significant shift in federal enforcement strategy: the U.S. Department of Justice is now actively using the False Claims Act (FCA) to scrutinize workplace DEI initiatives at companies that receive federal funds or hold government contracts.

Read the article here:
https://lnkd.in/ee_mvzCg

According to the article, DOJ is issuing civil investigative demands to major employers and treating DEI-related inquiries as potential fraud investigations, not policy disagreements. The focus is no longer limited to what a DEI policy says on paper, but how it operates in practice.

For employers and the attorneys, this represents a material change in exposure.

The FCA has traditionally been used to police false billing and fraudulent payment claims. DOJ is now advancing a novel theory: that maintaining certain DEI practices while certifying compliance with federal anti-discrimination laws can constitute a false or misleading claim for payment. This approach has been reinforced by executive orders, DOJ guidance, and public statements from senior DOJ leadership.

Whether courts ultimately endorse this theory remains to be seen. In the meantime, investigations are underway, and the cost of responding to a CID alone can be significant. Documentation, internal decision-making, and how DEI concepts are operationalized are now front and center.

This is exactly why Attorney Andrew Lieb recently served as a featured instructor for a New York State Bar Association CLE titled Risk-Informed DEI: Balancing Legal Exposure and Organizational Culture. The program was designed to address the reality employers and counsel are facing now.

The CLE focuses on practical, defensible frameworks for advising employers in this environment. That includes identifying where FCA risk may arise, understanding how regulators evaluate DEI implementation rather than labels, and developing documentation and compliance strategies that align with both legal obligations and organizational goals.

For attorneys advising employers, and for organizations that contract with or receive funding from the federal government, DEI is no longer a purely cultural initiative. It is a legal risk management issue that requires careful, informed handling.

Details on the NYSBA CLE, including registration and CLE credit information, are available here:
https://lnkd.in/eHK9FHfk

As enforcement continues to evolve, employers should not assume that rebranding or surface-level changes are sufficient. The question regulators are asking is how programs actually function, how decisions are made, and what representations are being made to the government. Getting that analysis right now can make the difference later.

Are Company DEI Programs Going to Get Them Sued for Reverse Discrimination?

This past month, the Department of Justice issued guidance on Diversity, Equity, and Inclusion (DEI) for Funding Recipients, but every employer and employee (regardless of government funding) should take notice of this guidance because it explains a lot of acts that give rise to a reverse discrimination lawsuit and many employees now seem to have a good case. 

Federal law prohibits discrimination on the basis of protected characteristics like race, sex, and religion, and if you object to a policy you believe is discriminatory, you are legally protected from retaliation. The DOJ’s new guidance clarifies that all discrimination, including “reverse discrimination” is illegal, even when done with good intentions under a DEI label. 

This means that policies giving preferential treatment based on race or sex in hiring, promotions, or contracting are likely unlawful. Watch out for “diverse slate” mandates or quotas in hiring, as these are specifically called out by the DOJ as problematic. 

The government is also scrutinizing seemingly neutral terms like “cultural competence” when they are just used as a substitute for race. Notably, DEI training that segregates employees by race or promotes stereotypes can create a hostile environment and violate federal law. The main takeaway is clear: workplace policies must ensure equal opportunity for everyone, without exception, and calling a discriminatory policy DEI does not protect it from constituting actionable discrimination.

New Rule Targets Salary History to Close Gender and Racial Pay Gaps

The Office of Personnel Management (OPM) has taken a significant step towards addressing gender and racial pay disparities within the Federal workforce with its latest regulation. Effective April 1, 2024, this rule prohibits the use of salary history in setting pay for new civilian employees, a practice that has historically contributed to ongoing pay inequities.

The private sector should take notice because the use of pay history is going to be a driving force in future claims under the Equal Pay Act based upon extrapolations from this regulation. 

Salary history has often been a determining factor in pay decisions, but this approach fails to account for the diverse experiences and qualifications individuals bring to their roles. More critically, it has perpetuated biases, inadvertently anchoring new salaries to previous ones that may have been influenced by discrimination. This cycle has been particularly detrimental to women and people of color, who statistically earn less than their white male counterparts. The gap is even more pronounced for women of color, underscoring the urgency of implementing measures that promote fair compensation.

By mandating that Federal agencies set pay based on merit, qualifications, and the requirements of the position rather than past compensation, the OPM aims to dismantle one of the barriers to achieving pay equity. This rule is a bold move towards creating a more equitable and inclusive Federal workforce, where pay disparities no longer shadow one's career.

For an in-depth understanding of the OPM's final rule and its impact on pay equity, visit the Federal Register: Advancing Pay Equity in Governmentwide Pay Systems.

Expect New Federal Sex Discrimination Laws & Regulations by the End of 2021

President Biden just established a Council to coordinate the Federal Government's efforts to advance gender equity and equality. 

In plain English, this counsel's mission is to combat sex discrimination by providing legislative and policy recommendations by September 24, 2021.

Stay tuned. Equality is happening now. 

Are you ready?

 

NYS Senate Report on Fair Housing - Changes Coming to RE Brokerage - Get Ready NOW

A 97 page report was just issued by the NYS Senate on persistent racial and ethnicity-related housing discrimination and this report is going to change the real estate brokerage industry in NYS forever. 

Are you ready? 

According to the report, housing discrimination has changed over the last hundred years from being overt to subvert. However, housing discrimination clearly still exists and something has to be done about it now. 

Would it surprise you to learn that in 2019 there were 28,880 reported complaints of housing discrimination in the USA? Again, twenty-eight thousand complaints!!!

Did you know that the precursor to the National Association of Realtors (NAR) required its members to discriminate as follows:

A Realtor should never be instrumental in introducing into a neighborhood a character of property or occupancy, members of any race or nationality or individuals whose presence will clearly be detrimental to property values in that neighborhood. 

While this overt discrimination is less prevalent today, the report explains that: 

Today, bad actors often use subtler forms of discrimination; they direct homebuyers of different apparent backgrounds toward different communities, impose more stringent financial requirements on people of color, and provide unequal services to clients based upon their race or ethnicity.

[S]ome real estate agents utilize subtle ways to discriminate, like racially coded guidance and disparate treatment in services offered.

In acknowledging that real estate brokers and agents are the gatekeepers for neighborhoods, the report makes the following categories of recommendations:

1. Develop a NYS Fair Housing Strategy
2. More Proactive Enforcement of Fair Housing Laws (i.e., testing, more funding, & data collection)
3. Licensing & Renewal Training Requirements (i.e., more training from better instructors for licensing & continuing education with a focus on implicit bias trainings)
4. Increased Penalties & Broader Accountability (i.e., $2K fines increased from $1K & managers responsible like brokers with increased experience requirements to qualify)
5. Standardized Broker Policies with Public (i.e., prospect identification, exclusive broker agreement requirements, & pre-approval for mortgages)
6. Internal Brokerage Policies (i.e., brokerages need updated policy manuals with fair housing statements & explanations of the consequences for violations)
7. State & Local Governments to Affirmatively Further Fair Housing (i.e., enforcement is everyone's responsibility) 
8. Brokers Must Open Offices in Communities of Color (i.e., 12 firms control 50% of listings, but only about 20% to 33% of the listings in minority communities)
9. More Diverse Brokerage Workforce (i.e., NAR's members are 80% white; need Diversity, Equity, & Inclusion initiatives to attract talent to the industry) 

The report also suggests, that brokers fund these recommendations by charging between $10 & $30 for license renewal to the 130,578 real estate brokerage licensees in NYS.

Are you ready yet? 

There are eleven new pieces of legislation supported in this report and because our state has a one-party controlled government, they are likely going to pass quickly.

Brokers, Salespersons, and other industry participants, like landlords, property managers, and attorneys need to get ahead of this now and make proactive changes to their practices today. The alternative is defending the next wave of enforcement initiatives. 

In reminding everyone of this salient fact, the report quoted Supreme Court Justice Thurgood Marshall in saying:

There is very little truth in the old refrain that one cannot legislate equality. Laws not only provide concrete benefits, they can even change the hearts of men some men, anyhow for good or evil.

It's time to change from being part of the problem to being part of the solution. Are you ready?

Systemic Employment Discrimination Enforcement Brought to you by the EEOC - Be Warned

The Equal Employment Opportunity Commission (EEOC) just launched a new website detailing how it pursues systemic discrimination cases against businesses throughout the US.

It's like a shot across the bow of your boat if you own or manage a business - they are coming for you if you don't start implementing Diversity, Equity, and Inclusion (DEI) initiatives now. 

When implementing your DEI initiatives focus on these 4 main categories, which EEOC targets for systemic employment discrimination enforcement:

1. Hiring / Promotion / Assignment / Referral
2. Policies / Practices
3. Lay-off / Reduction in Force / Discharge Policies 
4. ADA (disability) / GINA (genetic info) 

The EEOC defines systemic as "pattern or practice, policy and/or class cases where the discrimination has a broad impact on an industry, profession, company or geographic location.” 

Basically, it means that they are looking for more than just one plaintiff (think, class action, just a little different). 

The new EEOC website lists the top 10 systemic enforcements topics, which you should review immediately to avoid a charge from the EEOC:

1. Use of background checks
2. Denying women jobs in fields such as truck drivers, dockworkers, laborers
3. Refusal to hire African American, Hispanics and older workers for front of the house positions
4. Ending staffing agency use of referring applicants based on customer preferences
5. Widespread sexual harassment of teenagers in fast food chains
6. Racially hostile displays such as nooses and racist graffiti
7. Eliminating tap on the shoulder recruiting in favor of job posting
8. Challenging policies of issuing attendance points for medical related absences, without accounting for disabilities
9. Challenges of deportation made against employees complaining of discrimination
10. Challenges to abuse of vulnerable workers who were subject to years of confinement, abuse, deplorable conditions, and reduced pay following charges of discrimination

If you aren't concerned yet, be warned that in "2020, OGC resolved 33 systemic cases, recovering $69.9 million for approximately 25,000 individuals."

Do you have your policies, practices, and procedures in place to prevent EEOC from charging your company?