Yesterday, Brenna Jenny, Deputy Assistant Attorney General, Commercial Litigation Branch, Department of Justice (“DOJ”) Civil Division, offered remarks on False Claims Act enforcement related to so-called “illegal DEI.” Other outlets have broadly recapped these remarks, a rare opportunity for direct insight into DOJ’s thinking on these issues.
Below are 10 key points for government contractors from the remarks of Ms. Jenny (who spoke for herself, and not officially for the DOJ).
1. The “DEI” cases under DOJ investigation are mainly aimed at government contractors.
2. Most concern allegations of unlawful discrimination based on race or sex.
3. Most problematic are cases where it seems companies pressured supervisors to make hiring and promotion decisions based on race or sex.
4. Thus far, practices DOJ has seen and found problematic:
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Company creates demographic tracking goals not justified by Office of Federal Contract Compliance Programs (“OFCCP”) policy;
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Company ties compensation to meeting such goals; and
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Company makes personnel develop their own demographic goals, which are then tied to performance assessment and compensation.
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5. Training programs and affinity groups are not per se objectionable, but concerns may arise if they are described (even just internally) as special opportunities for certain groups to make connections and aid advancement. A “nexus to promotion” creates questions about legality.
6. “Diverse slate” policies that mandate consideration of candidates from certain demographics become problematic if companies lower objective credentials/standards for candidates of a certain race or sex.
7. Evidence of scienter regarding improper discrimination may extend beyond official policy to internal communication, e.g., e-mails and meeting notes that say the company needs to increase a certain demographic share to achieve goals.
8. On damages, DOJ may pursue total contract value on the theory that it would not have contracted with a discriminatory partner, may treat the cost of discriminatory programs as the amount of damages, or may take a hybrid approach.
9. Application of a multiplier will follow the traditional approach of DOJ civil frauds.
10. DOJ is focused on discrimination, not whether companies have a DEI program. A company can have a DEI program without engaging in unlawful discrimination.
Contractors may find some of the above points useful as they continue to assess the right approach to company policies and communications. We will continue to provide analysis and advice on these matters.