Trump Administration Expands Crackdown on Corporate Diversity Efforts With Investigations, Legal Threats

The Trump administration is dramatically escalating its campaign against corporate diversity, equity and inclusion (DEI) programs, launching investigations, creating new enforcement initiatives, and reshaping federal civil rights enforcement to align with the president’s political agenda.

According to USA TODAY, assistant Attorney General for Civil Rights Harmeet Dhillon told senators in July that the administration plans to bring “numerous investigations and lawsuits against institutions that continue to offend our federal civil rights laws.” Soon after, the Justice Department announced a new “Civil Rights Fraud Initiative,” threatening legal action under the False Claims Act — a law allowing the government to recover funds lost to fraud.

The department has begun issuing civil investigative demands (CIDs) to employers across multiple industries, requiring them to turn over details about DEI programs. The move has alarmed corporate leaders. “There is no doubt there is a new sheriff in town,” said Al Chakravarty, a partner at Saul Ewing law firm. “It absolutely puts the corporate community in a very challenging situation.”

False Claims Act violations can carry severe penalties — up to triple the value of a government contract plus $14,000 to $28,000 per claim. The Justice Department is also encouraging whistleblowers to come forward, offering a share of recovered funds. In 2024, the DOJ secured nearly $3 billion through such settlements and judgments.

Legal experts say the threat of investigation alone is proving powerful, as companies weigh reputational and financial risks. “None of that really matters if we have been dragged through the mud by this administration,” said David Glasgow, executive director of the Meltzer Center for Diversity, Inclusion and Belonging at NYU Law.

Federal scrutiny is expanding beyond private companies. The DOJ has opened probes into the hiring practices of Minnesota, the California Environmental Protection Agency, and the city of Chicago. At the same time, Republican-led states, including Tennessee, are investigating contractors’ DEI efforts.

Meanwhile, Trump’s recent appointment of Brittany Panuccio to the Equal Employment Opportunity Commission gives Republicans control of the agency for the first time in years. Acting EEOC Chair Andrea Lucas has pledged to dismantle what she calls “illegal DEI,” signaling reversals of Obama- and Biden-era protections, including those for LGBTQ+ workers.

With federal and state officials aligned, corporate America faces unprecedented pressure to retreat from diversity initiatives that were once mainstream in the nation’s workplaces.