EXECUTIVE ORDERS & FEDERAL POLICY

DOJ Outlines Antidiscrimination Enforcement Strategy Under False Claims Act

• DOJ Doubles Down on Antidiscrimination FCA Claims, Identifies Problematic Practices

OVERVIEW

On February 23, 2026, Deputy Assistant Attorney General Brenna Jenny delivered remarks at the Federal Bar Association’s Qui Tam Conference outlining the Department of Justice’s continued use of the False Claims Act to pursue alleged employment discrimination by federal contractors and funding recipients.

As reported in Issue 13, the Department of Justice has steadily escalated its use of the False Claims Act as an enforcement mechanism against federal contractors and grant recipients. The remarks reaffirmed the DOJ's position that compliance with federal antidiscrimination laws is material to government contracting and grant eligibility.

The Department indicated that it will pursue False Claims Act liability where contractors certify compliance with federal civil rights laws while allegedly engaging in employment practices that violate those statutes.

In describing current investigative focus, the DOJ identified several practices it considers high risk under this framework, including linking compensation or performance evaluations to demographic targets, restricting executive training or mentorship programs to specific protected characteristics, requiring candidate slates to include individuals from specified demographic groups, and lowering interview standards based on protected characteristics.

The Department stated that evidence in these matters may include internal communications, training materials, incentive structures, and compensation documentation. DOJ also indicated that damages in successful cases could include statutory penalties and recovery tied to the value of affected federal contracts.

LEGAL INTERPRETATION

The Department of Justice’s February 23, 2026 remarks clarify how the False Claims Act is being positioned as an enforcement tool in the employment discrimination context for federal contractors and grant recipients.

The False Claims Act imposes liability on entities that knowingly submit false or fraudulent claims for payment to the federal government, or that knowingly make false statements material to a claim. Federal contractors and funding recipients routinely certify compliance with federal civil rights statutes, including Title VII of the Civil Rights Act of 1964, as a condition of payment and continued eligibility.

DOJ’s stated theory is that where an entity certifies compliance with federal antidiscrimination law while allegedly engaging in employment practices that violate those statutes, that certification may be considered materially false. Materiality under the False Claims Act turns on whether the alleged noncompliance would have influenced the government’s payment decision. The Department has indicated that compliance with federal civil rights obligations is material to contracting and grant determinations.

The remarks also outlined how DOJ may attempt to establish knowledge and intent. Potential sources of evidence referenced include internal communications, compensation structures, performance metrics, training materials, and documentation reflecting how demographic goals are implemented in practice.

If pursued, False Claims Act cases in this context could expose contractors to treble damages and statutory per-claim penalties, in addition to potential suspension or debarment proceedings. The remarks do not change the underlying standards of Title VII or other federal antidiscrimination laws. Rather, they describe how existing civil rights obligations may be enforced through a statute traditionally associated with government procurement and fraud.

BRIDGE POV

The False Claims Act has long been used to pursue false certifications of compliance that are material to government payment decisions. What is evolving is the context in which the DOJ is applying that framework. 

By positioning compliance with federal antidiscrimination statutes as material to contracting and grant eligibility, the Department is signaling that employment practices are not insulated from procurement risk. 

This does not change the standards under Title VII. It does, however, elevate the stakes of certification. Organizations that operate federal contracts or receive federal funds are not simply defending policy choices. They are attesting to legal compliance in exchange for payment. 

Courts will still require a demanding showing under existing False Claims Act precedent. Allegations must establish that a certification was false, that the violation was material to payment, and that the entity acted knowingly. 

When civil rights compliance intersects with funding certifications, documentation, implementation controls, and internal alignment become risk management tools. 

ACTIONABLE STRATEGIES

1. Reassess Certification Language and Exposure: Inventory where your organization certifies compliance with federal antidiscrimination laws in contracts, grants, and System for Award Management (SAM) registrations. Confirm that leadership understands what is being certified and that operational practices align with those representations.
   
   

2. Align Incentive Structures With Legal Guardrails: Review compensation metrics, performance evaluations, and demographic goals to ensure they do not function as quotas or create decision-making frameworks based on protected characteristics. Aspirational objectives must not translate into categorical preferences.
   
   

3. Document Individualized Decision-Making: Strengthen documentation protocols in hiring, promotion, and compensation decisions. False Claims Act exposure turns on proof of knowing noncompliance. Clear, individualized, job-related decision records are the strongest defense against allegations of systemic discrimination tied to certification.

See also: The Department of Justice Launches Civil Rights Fraud Initiative (Issue 13); Court Rejects First Major FCA Retaliation Suit Challenging “DEI-Related” Use of Federal Funds — Signals Possible Limits of Civil-Rights Fraud Strategy (Issue 41); Federal Enforcement Campaign Targets Corporate DEI as Legal Standards Remain Unchanged (Issue 46); Court Decisions Provide Strategic Options for Companies Facing FCA Investigations (Issue 47)

WORKFORCE & EMPLOYMENT

EEOC Files Suit Against Coca-Cola Distributor Over Alleged Sex-Based Exclusion From Work Event

• US Civil Rights Agency Sues Coca-Cola Distributor For Excluding Men From Casino Work Trip

OVERVIEW

On February 18, 2026, the U.S. Equal Employment Opportunity Commission filed suit against Coca-Cola Beverages Northeast in the U.S. District Court for the District of New Hampshire, alleging that the company violated Title VII of the Civil Rights Act of 1964 by excluding male employees from a company-sponsored event.

According to the complaint, the company hosted a two-day professional development and networking event in September 2024 at the Mohegan Sun Casino and Resort in Connecticut that was limited to female employees. Approximately 250 women were invited and provided paid time away from regular duties, hotel accommodations, and related benefits. Male employees were not permitted to attend.

The EEOC alleges that limiting participation in a workplace event on the basis of sex constitutes unlawful discrimination under Title VII. The agency seeks injunctive relief and monetary damages for affected employees.

Coca-Cola Beverages Northeast stated that it believes the event complied with existing EEOC regulations and that the agency filed suit without conducting a full investigation. The company said it intends to present its position in court.

LEGAL INTERPRETATION

The EEOC brings this action under Title VII of the Civil Rights Act of 1964, which prohibits employers from discriminating against individuals with respect to compensation, terms, conditions, or privileges of employment because of sex.

Employer-sponsored training, networking, or incentive events may fall within Title VII’s scope if they are considered a term, condition, or privilege of employment. Courts have recognized that denial of access to professional development or workplace benefits can implicate Title VII when participation is tied to employment opportunity.

Title VII generally prohibits categorical exclusion of employees based on sex unless a statutory exception applies. The bona fide occupational qualification defense permits sex-based distinctions only where sex is reasonably necessary to the normal operation of the business and is interpreted narrowly.

In this case, the EEOC alleges that male employees were excluded from participation in the event based on sex. The agency seeks injunctive relief and monetary damages. The distributor has stated that it believes the event complied with existing EEOC regulations and that the agency filed suit without conducting a full investigation.

The lawsuit reflects the Commission’s current enforcement posture emphasizing sex-based exclusions in workplace programming. The statutory standards under Title VII remain unchanged.

Importantly, the decision does not foreclose future litigation. Judge Diaz’s concurrence acknowledged allegations that specific grants may have been terminated in ways that raise constitutional or statutory concerns. Those types of claims would require an as-applied challenge tied to concrete enforcement actions and identifiable harm. The decision leaves open future as-applied challenges based on how the orders are implemented in specific cases.

BRIDGE POV

This case does not eliminate the business rationale for leadership development or advancement programming. It reinforces a shift in how the EEOC is applying legal boundaries to workplace initiatives.

Title VII prohibits categorical exclusion based on sex. It does not prohibit employers from addressing opportunity gaps or investing in leadership pipelines.

The key is moving away from identity-exclusive eligibility and toward need-based, access-oriented frameworks. For instance, mentorship and sponsorship programs should be open to all employees, even if their design is intended to close opportunity gaps that disproportionately affect women or Black and brown employees.

Employers can pursue the same strategic objectives without restricting participation based on protected characteristics. 

ACTIONABLE STRATEGIES

1. Open Access, Target Design: Ensure eligibility for development and advancement programs is open to all employees. Use program structure, content, and outreach to address documented opportunity gaps without restricting participation by protected characteristics.
   
   
2. Anchor Strategy in Workforce Data: Support leadership initiatives with measurable promotion, retention, and pipeline data. Frame programs around closing opportunity gaps and strengthening enterprise capability, not identity-based participation.
   
   
3. Elevate Governance Review: In light of heightened enforcement scrutiny, implement cross-functional review of eligibility criteria, communications, and incentive structures. Inclusion strategy should reflect both business intent and disciplined compliance alignment.

COURTS & LITIGATION

Pension Funds Sue AT&T Over Exclusion of Workforce Diversity Disclosure Proposal

• AT&T Sued By New York City Pension Funds For Excluding Diversity Proposal

OVERVIEW

On February 17, 2026, four New York City public pension funds filed suit against AT&T Inc. in the U.S. District Court for the Southern District of New York, alleging that the company improperly excluded a shareholder proposal from its 2026 proxy materials.

The proposal would have required AT&T to adopt a policy of publicly disclosing its Consolidated EEO-1 workforce data, including breakdowns by race, ethnicity, and gender. The pension funds assert that AT&T previously disclosed this information publicly from 2021 through 2023, but discontinued the practice in 2024.

AT&T notified the Securities and Exchange Commission in December 2025 that it intended to exclude the proposal under the “ordinary business” exclusion in SEC Rule 14a-8. The SEC’s Division of Corporation Finance indicated that it would not object to the company’s decision based on AT&T’s representation that it had a reasonable basis for exclusion.

The pension funds contend that workforce diversity disclosure relates to equal opportunity accountability and constitutes a significant policy issue that should not qualify for exclusion under the ordinary business exception. The lawsuit seeks injunctive relief requiring AT&T to include the proposal in its proxy statement for the 2026 annual meeting.

LEGAL INTERPRETATION

The lawsuit challenges AT&T’s decision to exclude from its 2026 proxy materials a shareholder proposal requiring the company to adopt a policy of publicly disclosing its Consolidated EEO-1 workforce demographic data.

The claim is brought under Section 14(a) of the Securities Exchange Act of 1934 and SEC Rule 14a-8, which govern the solicitation of proxies and the inclusion of shareholder proposals in corporate proxy statements.

Rule 14a-8 permits qualifying shareholders to submit proposals for inclusion in a company’s proxy materials, subject to procedural and substantive requirements. Companies may exclude proposals under enumerated exceptions, including the “ordinary business” exclusion, which allows omission of proposals that relate to a company’s routine operations rather than significant policy issues.

AT&T notified the Securities and Exchange Commission that it intended to rely on the ordinary business exclusion to omit the workforce disclosure proposal. The SEC’s Division of Corporation Finance stated that it would not object to the exclusion based on the company’s representation that it had a reasonable basis for doing so.

The pension funds allege that the workforce disclosure proposal addresses a significant policy issue and therefore does not qualify for exclusion under the ordinary business exception. They contend that excluding the proposal violates Section 14(a) and Rule 14a-8.

BRIDGE POV

This lawsuit is not about whether AT&T is legally required to disclose workforce demographic data. It is about who decides whether shareholders can vote on that question.

The pension funds frame workforce disclosure as a matter of equal opportunity accountability and corporate governance. AT&T frames it as an ordinary business matter eligible for exclusion under SEC rules. The dispute reflects a broader tension between evolving investor expectations and the procedural boundaries of proxy regulation.

Workforce transparency has become a governance signal. While public disclosure of EEO-1 data is not mandated under federal securities law, institutional investors increasingly view it as material to risk oversight, culture, and long-term value.

The enforcement landscape is shifting in multiple directions at once. While some regulators are narrowing diversity-related initiatives, other segments of the investor community are pressing for greater disclosure and accountability. Public companies must navigate both dynamics within existing securities law frameworks and balance potential reputational risk

ACTIONABLE STRATEGIES

1. Separate Legal Obligation From Strategic Disclosure: Clarify what securities law requires versus what investor expectations may warrant. Decisions to include or exclude workforce disclosure proposals should weigh regulatory defensibility and reputational impact.
   
   
2. Elevate Disclosure Decisions to the Board Level: Workforce transparency and proxy exclusion decisions should sit with the board or governance committee. These choices increasingly signal how the company approaches equal opportunity accountability and investor engagement.
   
   
3. Proactively Assess Investor and Market Reaction: Before excluding shareholder proposals related to workforce disclosure, evaluate potential litigation exposure, investor response, and broader reputational consequences. Engagement strategies should be prepared in advance of proxy publication.

See also: EEOC Settles with 4 Law Firms Targeted for Investigation and Law Students Sue the EEOC (Issue 9); Democratic Lawmakers and Law Students Push Back on Trump Administration's Settlements with Law Firms (Issue 10); Federal Enforcement Campaign Targets Corporate DEI as Legal Standards Remain Unchanged (Issue 46)

EDUCATION & ADMISSIONS

Federal Title VI Enforcement Prompts Universities to End Diversity-Focused External Partnerships

• Colleges Quietly Cut Ties With Organizations That Help People Of Color 

OVERVIEW

More than 100 colleges and universities have ended or reviewed partnerships with external organizations that support students and professionals of color following federal scrutiny under Title VI of the Civil Rights Act.

The disengagement centers largely on affiliations with The PhD Project, a nonprofit organization that has supported the development of business school faculty and doctoral candidates from underrepresented racial and ethnic backgrounds. Thirty-one institutions entered resolution agreements agreeing to end those partnerships after investigations by the U.S. Department of Education’s Office for Civil Rights.

Universities have also reviewed or discontinued affiliations with additional diversity-focused organizations whose participation structures may limit membership or benefits based on race. Some institutions have conducted broader internal audits of external partnerships to assess potential Title VI exposure.

The Department has taken the position that institutional participation in programs or partnerships that restrict participation based on race may be inconsistent with nondiscrimination obligations tied to federal funding.

LEGAL INTERPRETATION

The Department of Education’s Office for Civil Rights initiated investigations into universities affiliated with The PhD Project and other diversity-focused external organizations to assess compliance with Title VI of the Civil Rights Act of 1964.

Title VI prohibits discrimination on the basis of race, color, or national origin in programs or activities receiving federal financial assistance. Institutions that receive federal funding must ensure that both their internal programs and affiliated activities operate in a manner consistent with those nondiscrimination requirements.

The legal question underlying the investigations is whether institutional participation in or support of organizations that restrict membership, programming, or benefits based on race constitutes a violation of Title VI obligations.

Thirty-one institutions entered resolution agreements with the Department agreeing to end partnerships with The PhD Project. Other universities discontinued or reviewed additional affiliations as part of broader compliance assessments.

The statutory standards under Title VI have not changed. The enforcement actions reflect the Department’s interpretation that race-restricted participation structures in affiliated programs may trigger compliance concerns for federally funded institutions.

BRIDGE POV

Higher education’s restructuring of diversity-focused external partnerships in response to federal Title VI enforcement directly reshapes the talent pipeline, workforce readiness, and the institutional ecosystems on which companies depend for future leadership development.

These partnerships have historically supported pathways into advanced-degree programs, faculty development, research leadership, and business education. When access-oriented initiatives are dismantled or restructured, the long-term composition of those ecosystems can shift.

This is not solely an education issue. It is a workforce strategy issue. Companies that rely on universities for recruiting, research partnerships, and leadership development cannot assume that historical talent flows will remain stable.

Federal enforcement may constrain how institutions structure programs. It does not eliminate the need for companies to think proactively about how future leadership cohorts are cultivated.

ACTIONABLE STRATEGIES

1. Reassess University Talent Dependencies: Identify which leadership tracks, advanced-degree pipelines, and research partnerships rely heavily on institutions undergoing partnership restructuring. Adjust campus engagement and sourcing strategy accordingly.
   
   
2. Build Open-Access Corporate Pathways: Expand fellowships, internships, mentorship, and sponsorship programs that are open to all participants while intentionally broadening access to advanced-degree and leadership tracks. Corporate pipeline design can mitigate volatility in university ecosystems.
   
   
3. Elevate Pipeline Stability to Workforce Planning: Incorporate higher education policy shifts into long-term workforce strategy discussions. Talent pipeline resilience should be treated as a strategic risk factor, not a passive outcome of university systems

See also: Major Enrollment Shift Following Affirmative Action Ban Creates Strategic Recruiting Challenge for Employers (Issue 50); Court Permanently Invalidates Department of Education's February 14,2025 "Dear Colleague" Directive on DEI (Issue 52)