The Justice Department is targeting companies that made efforts to hire underrepresented workers, using an anti-fraud law that could expose private firms to major financial damages.
The Wall Street Journal reported on Monday that the Trump administration is wielding the anti-fraud law to pursue cases against companies with inclusive practices in hiring or promoting employees. It's a law more commonly used against government contractors who bill the government for work that's never completed, or overcharge for their services, the WSJ reported.
The DOJ declined to comment and pointed Quartz to earlier policy statements. In May, the DOJ established the "Civil Rights Fraud Initiative" to pursue claims against federally funded companies that "knowingly violate" civil rights law.
"The federal government should not subsidize unlawful discrimination," said the memo from Deputy Attorney General Todd Blanche. It added that liability can result in "significant penalties."
Shortly after taking office, President Donald Trump issued an executive order "restoring merit-based opportunity," which barred the consideration of race and gender in federal hiring practices. The order targeted private and federal Diversity, Equity, and Inclusion (DEI) practices, which grew more prominent as backlash heightened over workplace discrimination and bias.
Google $GOOGL and Verizon $VZ are reportedly under investigation by the DOJ. Both declined to comment to the WSJ.
Experts who spoke to the WSJ said it's unusual for the federal government to use an anti-fraud law to ensure companies are complying with anti-discrimination laws.