Workforce Bulletin

On Friday, May 29, the Office of Management and Budget (OMB) published a sweeping plan to modify the Regulation for Federal Financial Assistance. A proposed rule seeks significantly to revise several parts of the OMB Guidance for Federal Financial Assistance[1] to clarify policies and requirements related to funding programs across the government.

This regulatory action follows last summer’s Executive Order (EO) 14332 Improving Oversight of Federal Grantmaking, issued August 7, 2025. It covers most Executive Branch agencies, including those that directly regulate employers and the health care sector in particular, such as the Department of Labor, the Occupational Safety and Health Administration, and the Department of Health and Human Services. This overhaul of federal grantmaking is potentially impactful on any organization – including universities and other educational institutions, arts organizations, manufacturers, healthcare providers and researchers, and other entities that rely on federal funding for research grants and other monies.

On May 19, 2025, the U.S. Department of Justice (DOJ) announced a new Civil Rights Fraud Initiative that will leverage the federal False Claims Act (FCA) to investigate and litigate against universities, contractors, health care providers, and other entities that accept federal funds but allegedly violate federal civil rights laws.

The initiative will be led jointly by the DOJ Civil Division’s Fraud Section and the Civil Rights Division—with support from the Criminal Division, federal civil rights agencies, and state partners. 

The initiative implements President Donald Trump’s Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (January 21, 2025), directing agencies to combat unlawful discrimination through the FCA, and complements Attorney General (AG) Bondi’s February 5 memorandum, “Ending Illegal DEI and DEIA Discrimination and Preferences.”

Recently, a Georgia federal district court permitted an employer’s counterclaims against its former employee-whistleblower to proceed in a False Claims Act (“FCA”) lawsuit after determining that the employer’s amended counterclaims for breach of fiduciary duty and breach of contract were sufficiently independent from the underlying FCA claims to survive a motion to dismiss, despite significant factual overlap. The decision in U.S. ex rel. Cooley v. ERMI, LLC, et al.., a qui tam FCA action where the plaintiff, known as a “Relator,” brings the claim on behalf of the ...