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When the US Department of Justice (DOJ) announced its first DEI-related False Claims Act (FCA) settlement in April 2026, a key question emerged: was this an isolated enforcement action or the start of a broader strategy? The answer is now clear.

In recent months, the DOJ has secured additional multi-million dollar FCA settlements with major federal contractors. These headline-grabbing resolutions highlight the administration’s intention to use the FCA as a significant enforcement tool in cases involving workplace DEI initiatives that the DOJ alleges included race- or sex-conscious employment decisions inconsistent with federal anti-discrimination laws.

A Developing Enforcement Trend

The DOJ’s first DEI-related FCA settlement involved a large technology company that agreed to pay USD 17 million to resolve allegations that certain diversity-focused employment practices violated anti-discrimination requirements incorporated into its government contracts. The company denied wrongdoing and did not admit liability. (More here: The Next Stage in Enforcement Escalation: DOJ’s First DEI-Related FCA Settlement.)

Since then, the government has announced increasingly larger settlements involving other prominent federal contractors.

In August, a major professional services firm agreed to pay more than USD 21 million to resolve allegations that race and sex were considered in certain hiring, promotion, staffing, and professional development decisions. The settlement also resolved related claims brought by a private relator under the FCA’s whistleblower provisions.

Continue Reading DOJ Doubles Down: Latest FCA Settlements Signal DEI Enforcement Escalation

Federal EEO-1 reporting may be heading for a major reset — but employers should be careful not to mistake federal uncertainty for a broader retreat from workforce pay-data obligations. The Equal Employment Opportunity Commission (EEOC) has proposed rescinding the long-standing annual EEO workforce demographic reporting rules, including the EEO-1 Component 1 report filed by many private employers and federal contractors. At the same time, several states and localities are moving in the opposite direction, adopting or expanding pay-data and demographic reporting requirements that are more granular, more jurisdiction-specific, and less dependent on the federal framework.

For multinational and multistate employers, the practical message is straightforward: do not dismantle EEO-1 data infrastructure yet. Instead, use this moment to rationalize workforce data governance, build flexibility for diverging state requirements, and ensure demographic and pay data are collected, stored, analyzed, and used in a legally defensible way.

EEO-1 Requirements

The EEO-1 framework has been part of the US employment law compliance architecture for decades. Historically, the EEOC and the Office of Federal Contract Compliance Programs (OFCCP) have jointly administered the EEO-1 Component 1 Data Collection program to monitor compliance with federal civil rights laws. Private employers with 100 or more employees and certain federal contractors with 50 or more employees have been required to file annual workforce demographic reports.

Component 1 requires covered employers to report headcount data disaggregated by race/ethnicity, sex, and job category. The Biden administration’s proposed rule to reinstate Component 2 pay data reporting — which required employers to report aggregate compensation and hours-worked data segmented by race, sex, and job category — was formally withdrawn following the change in administration and is not currently required.

What’s Changing at a Federal Level

On July 23, 2026, the EEOC issued a Notice of Proposed Rulemaking that would rescind annual EEO-1, EEO-2, EEO-3, EEO-4, EEO-5, and EEO-6 workforce demographic reporting and related recordkeeping rules. If finalized as proposed, covered private sector employers — including covered federal contractors — would no longer file routine EEO-1 reports with the EEOC. Until the EEOC issues a final rule, existing federal reporting and recordkeeping requirements remain in effect.

For federal contractors, the status of EEO-1 reporting is more complicated than for purely private-sector employers. On August 21, 2026, OFCCP published three coordinated final rules that eliminate – from a regulatory perspective – federal contractor affirmative action requirements for women and minorities and narrow contractor affirmative action requirements regarding individuals with disabilities.

Continue Reading Federal Retreat, State Expansion: The New Workforce Data Landscape for US Employers

Six months ago, our Back‑to‑School Guide on Recent Developments in Workplace DEI examined how the 2025 executive orders—and early guidance from the Equal Employment Opportunity Commission (EEOC) and the Department of Justice (DOJ)—led many US-based employers to recalibrate DEI-related risk, conduct DEI health checks, and fine-tune specific initiatives and practices.

In 2026, the risk is not coming from landmark court rulings declaring DEI unlawful. Instead, it is coming from enforcement tools: investigations, subpoenas, contract terms and leverage applied across multiple fronts—often before any litigation is filed.

That reality came into sharper focus on March 26, with the issuance of a new executive order further targeting “DEI discrimination” by federal contractors.

Workplace DEI remains lawful. But employers should expect heightened scrutiny of how programs are structured, incentivized, documented, and defended—through EEOC inquiries, administrative subpoenas, FCA theories tied to certifications, and discovery-driven litigation.

The New Executive Order Enhances DEI Risk for Federal Contractors

The White House’s new executive order—“Addressing DEI Discrimination by Federal Contractors”—creates new contractual obligations for federal contractors and subcontractors. Potential consequences include termination, debarment, and potential False Claims Act (FCA) exposure. The order (and the accompanying Fact Sheet) is operationally consequential: it ties compliance to federal contracting, expands agency access to contractor information, and more explicitly links compliance with these contractual obligations to FCA theories.

Continue Reading Why the New DEI Executive Order Matters for Federal Contractors—and Signals Broader Risk for All US Employers

On March 15, 2022, the US Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) issued a new directive putting federal contractors on notice that it will more closely scrutinize their pay equity audits. Making headlines, the directive states that federal contractors are expected to hand over information about their internal pay analyses when being audited by the office, including documents that are protected by the attorney-client privilege and/or work product doctrine.

Background

Executive Order 11246 requires affirmative action and prohibits federal contractors from discriminating on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin. Contractors also are prohibited from discriminating against applicants or employees because they inquire about, discuss, or disclose their compensation or that of others.

As part of their affirmative action obligations, supply and service contractors are required to perform an in-depth analysis of their total employment practices to determine whether and where impediments to equal employment opportunity exist. This includes conducting an in-depth analysis of their compensation systems to determine whether there are gender-, race-, or ethnicity-based disparities, as provided in 41 CFR 60-2.17(b)(3).3.

To comply with the regulations, most companies doing business with the federal government  conduct an evaluation of their pay practices for potential gender, race, or ethnicity-based disparities.  Oftentimes, these analyses are performed with the help of outside counsel who provides legal advice regarding, among other things, compliance with the requirements enforced by OFCCP. And, until now, these pay audits have been considered privileged and confidential.

Impact of the new directive

During a compliance evaluation, a supply and service contractor is required to provide OFCCP with compensation data. In addition to requesting additional compensation data, interviews, and employment records, the OFCCP is now making explicit that it may also seek the contractor’s evaluation under § 60-2.17(b)(3), which the OFCCP calls the “pay equity audit.”Continue Reading OFCCP Emboldened To Demand Contractors’ Internal Pay Analyses

Two recent events in the US vividly illustrate the growing centrality of gender pay equity issues. On one side of the ledger, in early April 2018, the US Court of Appeals for the Ninth Circuit, in Rizo v. Fresno County Office of Education, held that an employee’s prior salary—either alone or in a combination…

On February 1, 2018, the Office of Federal Contract Compliance Programs (OFCCP) sent 1,000 Corporate Scheduling Announcement Letters (CSALs) to federal contractors informing them that they may be audited for compliance with federal non-discrimination requirements/affirmative action plans.
Continue Reading Federal Contractors: Be Prepared For An Audit In 2018

In a move that will surprise few, the federal Office of Management and Budget (OMB) has “stayed” the upcoming EEO-1 compensation data reporting requirement, pending further review. As we previously wrote about here, in 2016, the Equal Employment Opportunity Commission (EEOC) implemented a rule requiring employers with 100 or more employees (and federal contractors with 50 or more employees) to include compensation data in their annual EEO-1 reports. Covered employers were already required to file an EEO-1 report tracking race/ethnicity and sex; the stay does not impact this requirement.
Continue Reading Federal Government Hits Pause on Upcoming Pay Reporting Requirement