The landscape for Diversity, Equity, and Inclusion (DEI) in the United States has shifted dramatically in 2025. What was once viewed as a cornerstone of corporate social responsibility is now a flashpoint for legal scrutiny, political backlash, and reputational risk. At the center of this transformation is an increasingly empowered and incentivized figure: the whistleblower.
A New Enforcement Era
Countering DEI has become a top priority for the current administration in Washington. Executive orders issued in January 2025 explicitly target what the administration calls “illegal DEI,” though the term remains legally undefined. These orders direct federal agencies to investigate and dismantle DEI programs across sectors, with the Department of Justice (DOJ) leading the charge.
In a memo, Deputy Attorney General Todd Blanche announced the launch of a “Civil Rights Fraud Initiative,” signaling DOJ’s intent to use the False Claims Act (FCA) to pursue federal contractors who “knowingly violate civil rights laws” through DEI programs. The FCA is a potent tool: it allows whistleblowers to file qui tam lawsuits on behalf of the government and receive a share of any recovery, which can be triple the amount of the alleged fraudulent claims.
This memo was a call to action. Federal agencies are not equipped to root out “illegal DEI” or “egregious practitioners” alone. Efforts to have agencies send certifications to companies were uncoordinated and non-standardized, and ultimately unlikely to root out the kinds of specific practices at companies that had sophisticated counsel. Federal agency budgets have been slashed and the brain drain in the federal government is real. Starting a new initiative takes resources: time, attention, and money to deploy a large-scale fishing campaign.
Or, there’s a short-cut: get ordinary people with access and knowledge to quasi-investigate and flag policies and practices for the government. We’re already seeing the wheels in motion. DOJ is trawling actively for complainants and whistleblowers. We have not yet seen a DEI FCA claim tested in court, and to be sure, any DEI-based FCA claim would likely face substantial defenses, including the ambiguity over what the new administration and federal agencies deem “illegal DEI.” The government would also need to establish that a funding recipient made false statements or claims and that the recipient knew the statements were false.
But if DEI FCA claims could face problems as a matter of law, the risk remains, and the impacts of an investigation can be substantial, even if it ultimately fails. Other agencies, Congress, state attorneys general, individual plaintiffs, and activists create a thicket of potential legal and reputational risks. Indeed, the Department of Education launched an “End DEI Portal” to submit reports of discrimination based on race or sex in publicly-funded K-12 schools. Agencies like the FCC and FTC have already embedded anti-DEI priorities into their enforcement agendas, which will no doubt be aided by whistleblowers.
The Rise of Covert Surveillance
The whistleblower landscape is also evolving. Whistleblowers may be eligible to recover funds, but in the current environment – and in a soundbite-TikTok world, where clout is chased and clout chasers are lauded – there is a status and certain célébrité conferred to those who can take credit in grassroots activism. Even in relatively prosaic corners of corporate America, whistleblowers are not just internal employees but operatives using covert tactics. A recent lawsuit in California against a large tech company illustrates this trend. The plaintiff, represented by America First Legal—a group with deep ties to the White House—relied in part on secretly recorded video footage of internal DEI discussions. In 2024, Missouri filed a case against the company based on similar allegations and covert evidence.
This tactic is not isolated. Hidden camera footage surfaced purporting to show school officials continuing race-based affirmative action practices despite the Supreme Court’s 2023 ruling against such practices. These videos are often released with the explicit intent to “name and shame” organizations, feeding into a broader media and litigation strategy.
What This Means for Companies
For companies—especially federal contractors—the implications are profound. First, even well-intentioned DEI programs can be construed as “camouflaged” discrimination if they are not carefully structured and documented. As hundreds of companies altered the way they present their programs and policies regarding DEI publicly, through changes to SEC filings, websites, internal structuring and messaging and more, there is a real threat of being accused of, nonetheless, doing DEI “in secret,” potentially pitting companies against “rogue employees” that were only a short time ago aligned with company values and encouraged. Second, the threat of whistleblower-driven risk is real and growing. The combination of financial incentives, political support, and media amplification has fostered a cottage industry around exposing “secret” DEI.
There are concrete measures that companies can take to mitigate downstream DEI risks. Specifically, we recommend:
- Assessing Risk Proactively: This is a good time to review DEI programs, policies, and practices, especially those tied to federal funding. This will help ensure that all certifications and compliance documents are accurate and defensible. This assessment could also involve a review of social media and online forums to sweep for potential whistleblowers or publicity around DEI policies, which may influence a given company’s risk tolerance. Making changes now, on your own terms, can help you preserve important values and communicate effectively with internal and external constituencies.
- Gaining Consensus for Policies and Practices: Ensure that DEI programs, policies, and practices are socialized and pressure tested for risk and the company’s risk tolerance. Before, at many companies, there may not have been a need for granular compliance and oversight review of DEI, including and up to the Board or Board committee level. Now, companies should think about the internal and external stakeholders and advisors that should be consulted.
- Aligning Current Practices: Programs that are retained should be aligned with the legal requirements, as they are currently understood, and company strategy or values. Many companies wish to balance their values with acceptable levels of risk. Companies should take a long-term view of any changes they make to policies and programs, weighing any that they retain against their long-term business strategy and various stakeholders. Publicization of programs that are maintained should be well-considered and accompanied, if necessary, by a strategic communication plan.
- Inoculating Against “Secret” DEI Allegations: Internal communications around DEI—including meetings, trainings, and guidance—could be as scrutinized as external publications and websites. Internal communications across teams should be consistent with a company’s public policies. Companies should consider establishing clear protocols for DEI discussions and training leadership on how to navigate sensitive topics without creating legal vulnerabilities.
Conclusion
During the first half of 2025, many companies made public changes to their DEI policies while issuing private reassurances to their workforces that little had changed. This dynamic can create risk of exposure, investigation, and liability and reputational harm. Indeed, if the goal is to preserve aspects of DEI programs, companies may make the job harder if they adopt inconsistent external and internal narratives. As the legal and political environment continues to evolve, companies must remain vigilant, transparent, and strategic. DEI is not going away, but how it is implemented and defended must adapt to this new era of scrutiny.
