Companies Standing Up to Trump on DEI
Companies like Costco and Levi’s are rejecting the White House’s positions on diversity, equity, and inclusion.
If you play the whistle, you get paid.
The Justice Department’s reward system, which encourages employees to blow the whistle on their employers, could lead to an increase in whistleblowing as the Trump administration ramps up its crackdown on diversity, equity and inclusion efforts.
The Trump administration is investigating major companies under the False Claims Act. The False Claims Act is a federal law used by the Justice Department to take action against contractors who allegedly defrauded the government and paid large sums of money.
Last year, the Justice Department established a special committee to investigate federal contractors for alleged violations of the False Claims Act. The agency announced this week that it has seen a “surge” in whistleblowing in recent years.
Assistant Attorney General Brenna Janey’s office prioritizes anti-discrimination litigation across a wide range of industries. Some of these investigations were brought to the Justice Department’s attention by whistleblowers, Janey said at a Federal Bar Association event in February.
Grassroots efforts have also led to a proliferation of insiders divulging details of their companies’ DEI programs. Prominent DEI critic Robbie Starbuck routinely boasted about the network of tipsters who helped launch pressure campaigns to name and shame companies into canceling their programs.
In some cases, whistleblowers use covert tactics such as hidden cameras. The America First legal advocacy group, which files discrimination complaints against American companies, used the footage in its complaints.
Freshfields attorneys Elizabeth Bieber, Austin Evers, and Jennifer Loeb said at the July 2025 Harvard Law School Forum on Corporate Governance that gaining “public members with the access and knowledge to quasi-investigate and report on government policies and practices” is central to the Justice Department’s strategy.
“We are already seeing the wheels in motion, with the Department of Justice actively pursuing complainants and whistleblowers,” they said.
IBM DEI settlement adds pressure
The stakes rose further in April when IBM agreed to pay $17 million to resolve allegations that its DEI program violated the False Claims Act. This is the first settlement since the Justice Department established the Civil Rights Fraud Initiative, which uses anti-fraud laws to crack down on DEI.
Companies are now bracing for an increase in whistleblower lawsuits.
“Given that the Department of Justice strongly encourages whistleblowing activity, I suspect we will see more whistleblowing activity,” David Glasgow, executive director of the Meltzer Center for Diversity, Inclusion, and Belonging at New York University School of Law, told USA TODAY.
What’s in it for employees? Glasgow says they can pocket 15% to 25% of their profits.
“Knowing that any employee within a company can sue themselves means that organizational leaders have an incentive to be cautious,” he said.
Government Contractors on DEI Notifications
Companies have become more cautious since President Donald Trump took office on a campaign promise to restore equity in the workplace by eradicating “woke” DEI policies that harm men and white Americans.
One of his first executive orders required federal contractors to certify that they are not operating “programs that promote DEI in violation of applicable federal antidiscrimination laws.”
Fearing lawsuits and the loss of government contracts, dozens of the nation’s largest companies, from McDonald’s to Facebook owner Meta, have pulled back on their diversity programs.
Pressure to align with the president’s policies has only increased in recent months. In March, President Trump signed another executive order requiring federal agencies to prohibit discriminatory DEI practices. Under this directive, the Department of Justice is tasked with expediting the review of these cases.
Justice Department drafts whistleblower designation for DEI crackdown
Phelps Dunbar attorneys A. Brian Albritton and Raquel Ramirez-Jefferson said enforcement would likely be carried out by employees.
“Controversy over how such programs actually operate creates fertile ground for whistleblower allegations that compliance has been misrepresented,” they wrote in April. “This order effectively translates internal DEI disagreements into potential FCA fact patterns, especially when contractors certify compliance as a condition of payment.”
Issues for companies include setting goals based on race or gender, tying bonuses to achieving demographic goals, and offering training and mentoring opportunities only to employees of a certain race or gender.
Lawyers believe the practice may be legally defensible in some cases, but there are too many risks for companies to unravel. Defendants in False Claims Act lawsuits can be sued for three times the amount of damages claimed by the government, not to mention the potential loss of millions or billions of dollars worth of federal contracts.
Craig Leen, a partner in the labor, employment and workplace safety practice at K&L Gates LLP and former director of the Office of Federal Contract Compliance Programs, said most federal contractors have shut down DEI programs that could have led to conflicts with the Trump administration and replaced them with anti-discrimination programs.
“Do you think we’ll see more employee whistleblowers? Yes, I think so,” Leen said. “But I also think that the number of problematic programs will decrease significantly in the future.”
