Cost of Living Adjustment of Civil False Claims and False Statement Penalties
May 31, 2016
Overview
The financial penalties for violating federal contracting obligations are going up beginning July 1, 2016. Thereafter, there will be annual COLA increases for such penalties. Adjusted penalty levels may increase to as much as 250 percent of the level(s) in effect in 2015, and each agency is authorized to increase the penalty itself by as much as 150 percent. Accordingly, contractors may face a significant range of penalties depending on the penalty increases assessed by the individual agencies that they contract with. The bottom line is that the risks related to potential false claims and false statements are increasing for federal contractors. The details are provided below.
The New Civil Penalties
The Federal Civil Penalties Inflation Adjustment Act of 1990, as further amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (“FCPIAA”), provides for adjustments for inflation to the civil monetary penalties that Executive Agencies can assess for violations of applicable statutes and regulations, including those relating to False Statements and False Claims. The amendment also provides for FCPIAA escalation of Occupational Health and Safety Act violations.
The Office of Management and Budget’s (“OMB’s”) implementing memorandum states that “[i]n accordance with the 2015 Act, however, agencies shall not increase penalty levels by more than 150 percent of the corresponding levels in effect on November 2, 2015. Note: The 150 percent limitation is on the amount of the increase; therefore, the adjusted penalty level(s) will be up to 250 percent of the level(s) in effect on November 2, 2015.” Agencies have until July 1, 2016 to issue their specific interim final rules to adjust civil monetary penalties.
Following up on the FCPIAA and OMB guidance, on May 26, 2016, the Department of Defense (“DOD”) issued its interim final rule to adjust the civil monetary penalties that it may access for violations of designated provisions, including notably violations involving False Claims and False Statements. Under the interim final rule, the maximum per-claim penalty for such violations will increase to $10,781 from $5,500. 81 Fed. Reg. 33391. The stated purpose of the adjustment is to “improve the deterrent effect of civil monetary penalties and to promote compliance with the law.” Id. As noted by the interim final rule, the DOD is authorized to issue a “cost-of-living adjustment” to escalate this amount each year.
Significantly, the interim final rule provides that the escalated penalty “must apply only to civil monetary penalties, including those whose associated violation predated such increase, which are assessed after the date the increase takes effect (i.e., July 1, 2016).” [Emphasis added.]
Take-Away:
- As noted above, these new penalties can be assessed against violations predating the escalation.
- Make sure that you have a working compliance program and training to ensure your personnel understand the importance of compliance with applicable laws and regulations.
- Federal Acquisition Regulation (“FAR”) Mandatory Disclosure rules require reporting of credible evidence of actual or suspect violations. Early identification will help you to timely report and address such matters. If you become aware of a possible violation of covered laws or regulations, take appropriate steps to promptly investigate.
If you have any questions with regard to these matters, please contact Susan Warshaw Ebner, or the FortneyScott attorney with whom you work.
On Tuesday, December 2, at 2pm EST , join attorneys from Novus Law Firm and FortneyScott and an I/O Psychologist from DCI as we discuss the scope of data being requested by the federal government and how to ensure that your institution is prepared. To register for this webinar, please CLICK HERE . Higher Education continues to be targeted by the Administration’s enforcement efforts to ensure compliance with federal anti-discrimination laws. Employment and admissions practices are subject to increased scrutiny by multiple federal agencies. For instance, both the Department of Justice (DOJ) and Health & Human Services (HHS) have issued Civil Investigation Demand (CID) letters requiring the submission of voluminous data and documents. These investigations pose significant risks, including potential civil and criminal lability, and the loss of federal contracts and grants. Additionally, the Department of Education (ED) has proposed major changes to the Integrated Postsecondary Education Data System (IPEDS) which, if implemented, would require institutions to report up to six years of detailed admissions data including applicant demographics and admissions criteria for undergraduate and graduate programs. Given this rapidly changing legal compliance landscape, higher education institutions should be prepared for government investigations that scrutinize wide-ranging practices, including those related to employment, admissions, and compensation. We will cover: Responding to federal agency investigations, which can include CIDs & scope of data production How to prepare for a potential investigation How the proposed IPED revisions may impact reporting burdens How federal agencies may use and share institute data Prospective data analytics that should be conducted
Understanding that everyone is going into Q4, which is the kickoff of your merit and compensation cycles, we want to support those compliance efforts. Join FortneyScott attorneys and our guest speaker, Rick Holt from Resolution Economics, on Thursday, October 23, 2025, at noon EDT for a discussion on strategies for reviewing compensation decisions under the governing legal standards and the Trump Administration’s enforcement priorities. We will focus on discussing: Changes in legal enforcements; Legal considerations for conducting pay analyses; Recommendations on refreshing analysis models; and, Remediation strategies. To register for FortneyScott’s Workplace Legal Compliance training series, please click here .
Federal policies under the Trump Administration are reshaping workplaces nationwide. Employers must stay ahead of evolving laws and shifting EEOC priorities. Join FortneyScott attorneys on Thursday, September 18th at noon EDT to learn the key steps organizations should take now to ensure compliance with EEO laws influenced by these broader policy changes. Key Topics to be Covered Include: Status of the Commission and what to expect once there is a restored quorum; Current EEOC priorities , including protecting religious liberties, eliminating unlawful DEI, and reshaping sex discrimination; Notable EEOC enforcement actions, updates, and emerging trends; and Actionable strategies and key takeaways to ensure compliance with Title VII, the PWFA, etc . This webinar is the first in a four-part series designed for compliance professionals, in-house counsel, HR and inclusion leaders, and other business leaders responsible for labor and employment law compliance.
Federal policies under the Trump Administration are reshaping workplaces nationwide. Employers must stay ahead of evolving laws and shifting EEOC priorities. Join FortneyScott attorneys on Thursday, September 18 th at noon EDT to learn the key steps organizations should take now to ensure compliance with EEO laws influenced by these broader policy changes. Key Topics to be Covered Include: Status of the Commission and what to expect once there is a restored quorum; Current EEOC priorities , including protecting religious liberties, eliminating unlawful DEI, and reshaping sex discrimination; Notable EEOC enforcement actions, updates, and emerging trends; and Actionable strategies and key takeaways to ensure compliance with Title VII, the PWFA, etc. This webinar is the first in a four-part series designed for compliance professionals, in-house counsel, HR and inclusion leaders, and other business leaders responsible for labor and employment law compliance. To register for FortneyScott’s Workplace Legal Compliance training series, please click here .
During the first months of the Trump Administration employers have faced unprecedented challenges in understanding and keeping up with the rapidly changing legal environment. To assist our clients in successfully navigating these challenges, FortneyScott is initiating a four-month, complimentary training program addressing Workplace Legal Compliance. These new, original trainings will occur during September through December, 2025 and will include 4 monthly webinars, at least 4 podcasts of DC Insider—Employer Update and timely alerts as developments unfold. The trainings are designed to provide substantive updates and to assist employers in addressing the latest developments as part of their organization’s comprehensive workplace legal compliance program. How to Participate : Register now for the FortneyScott Workplace Legal Compliance webinars, podcast notifications and alerts: Register for all 4 webinars (September 18, October 23, November 20 and December 18). Register for notifications of new podcast episodes of DC Insider—Employer Update. Register for Workplace Legal Compliance alerts and updates. If you have an immediate questions or feedback, please contact any of the FortneyScott attorneys or email info@fortneyscott.com . Additional Background : Workplace legal compliance is essential for mitigating risk, protecting employees, and fostering a positive and reputable company culture. Adhering to federal, state, and local laws concerning labor, safety, and discrimination prevents costly penalties, lawsuits, and operational disruptions. Beyond simply avoiding legal and financial consequences, compliance builds trust with employees and other stakeholders by demonstrating a commitment to ethical conduct. This creates a fair and safe work environment that boosts employee morale, increases retention, and enhances overall productivity. By proactively managing legal responsibilities, an organization strengthens its reputation and brand image, which in turn can attract top talent and create a competitive advantage in the marketplace. FortneyScott’s Workplace Legal Compliance supports employers in meeting these objectives. Ultimately, legal compliance is not only a regulatory obligation – it is a strategic investment in the long-term success and integrity of your organization.
We are pleased to announce that FortneyScott attorney David Fortney has been recognized as one of The Best Lawyers in America for 2026, in recognition of outstanding achievement and contributions to the field of Labor and Employment law. This marks a continuation of his recognition in The Best Lawyers in America since 2008, reflecting a sustained commitment to excellence, innovation, and leadership. It underscores the impact of his work within the professional community. We extend our congratulations on this well-deserved recognition.
On Tuesday, December 2, at 2pm EST , join attorneys from Novus Law Firm and FortneyScott and an I/O Psychologist from DCI as we discuss the scope of data being requested by the federal government and how to ensure that your institution is prepared. To register for this webinar, please CLICK HERE . Higher Education continues to be targeted by the Administration’s enforcement efforts to ensure compliance with federal anti-discrimination laws. Employment and admissions practices are subject to increased scrutiny by multiple federal agencies. For instance, both the Department of Justice (DOJ) and Health & Human Services (HHS) have issued Civil Investigation Demand (CID) letters requiring the submission of voluminous data and documents. These investigations pose significant risks, including potential civil and criminal lability, and the loss of federal contracts and grants. Additionally, the Department of Education (ED) has proposed major changes to the Integrated Postsecondary Education Data System (IPEDS) which, if implemented, would require institutions to report up to six years of detailed admissions data including applicant demographics and admissions criteria for undergraduate and graduate programs. Given this rapidly changing legal compliance landscape, higher education institutions should be prepared for government investigations that scrutinize wide-ranging practices, including those related to employment, admissions, and compensation. We will cover: Responding to federal agency investigations, which can include CIDs & scope of data production How to prepare for a potential investigation How the proposed IPED revisions may impact reporting burdens How federal agencies may use and share institute data Prospective data analytics that should be conducted
Understanding that everyone is going into Q4, which is the kickoff of your merit and compensation cycles, we want to support those compliance efforts. Join FortneyScott attorneys and our guest speaker, Rick Holt from Resolution Economics, on Thursday, October 23, 2025, at noon EDT for a discussion on strategies for reviewing compensation decisions under the governing legal standards and the Trump Administration’s enforcement priorities. We will focus on discussing: Changes in legal enforcements; Legal considerations for conducting pay analyses; Recommendations on refreshing analysis models; and, Remediation strategies. To register for FortneyScott’s Workplace Legal Compliance training series, please click here .
Federal policies under the Trump Administration are reshaping workplaces nationwide. Employers must stay ahead of evolving laws and shifting EEOC priorities. Join FortneyScott attorneys on Thursday, September 18th at noon EDT to learn the key steps organizations should take now to ensure compliance with EEO laws influenced by these broader policy changes. Key Topics to be Covered Include: Status of the Commission and what to expect once there is a restored quorum; Current EEOC priorities , including protecting religious liberties, eliminating unlawful DEI, and reshaping sex discrimination; Notable EEOC enforcement actions, updates, and emerging trends; and Actionable strategies and key takeaways to ensure compliance with Title VII, the PWFA, etc . This webinar is the first in a four-part series designed for compliance professionals, in-house counsel, HR and inclusion leaders, and other business leaders responsible for labor and employment law compliance.
Federal policies under the Trump Administration are reshaping workplaces nationwide. Employers must stay ahead of evolving laws and shifting EEOC priorities. Join FortneyScott attorneys on Thursday, September 18 th at noon EDT to learn the key steps organizations should take now to ensure compliance with EEO laws influenced by these broader policy changes. Key Topics to be Covered Include: Status of the Commission and what to expect once there is a restored quorum; Current EEOC priorities , including protecting religious liberties, eliminating unlawful DEI, and reshaping sex discrimination; Notable EEOC enforcement actions, updates, and emerging trends; and Actionable strategies and key takeaways to ensure compliance with Title VII, the PWFA, etc. This webinar is the first in a four-part series designed for compliance professionals, in-house counsel, HR and inclusion leaders, and other business leaders responsible for labor and employment law compliance. To register for FortneyScott’s Workplace Legal Compliance training series, please click here .
During the first months of the Trump Administration employers have faced unprecedented challenges in understanding and keeping up with the rapidly changing legal environment. To assist our clients in successfully navigating these challenges, FortneyScott is initiating a four-month, complimentary training program addressing Workplace Legal Compliance. These new, original trainings will occur during September through December, 2025 and will include 4 monthly webinars, at least 4 podcasts of DC Insider—Employer Update and timely alerts as developments unfold. The trainings are designed to provide substantive updates and to assist employers in addressing the latest developments as part of their organization’s comprehensive workplace legal compliance program. How to Participate : Register now for the FortneyScott Workplace Legal Compliance webinars, podcast notifications and alerts: Register for all 4 webinars (September 18, October 23, November 20 and December 18). Register for notifications of new podcast episodes of DC Insider—Employer Update. Register for Workplace Legal Compliance alerts and updates. If you have an immediate questions or feedback, please contact any of the FortneyScott attorneys or email info@fortneyscott.com . Additional Background : Workplace legal compliance is essential for mitigating risk, protecting employees, and fostering a positive and reputable company culture. Adhering to federal, state, and local laws concerning labor, safety, and discrimination prevents costly penalties, lawsuits, and operational disruptions. Beyond simply avoiding legal and financial consequences, compliance builds trust with employees and other stakeholders by demonstrating a commitment to ethical conduct. This creates a fair and safe work environment that boosts employee morale, increases retention, and enhances overall productivity. By proactively managing legal responsibilities, an organization strengthens its reputation and brand image, which in turn can attract top talent and create a competitive advantage in the marketplace. FortneyScott’s Workplace Legal Compliance supports employers in meeting these objectives. Ultimately, legal compliance is not only a regulatory obligation – it is a strategic investment in the long-term success and integrity of your organization.
We are pleased to announce that FortneyScott attorney David Fortney has been recognized as one of The Best Lawyers in America for 2026, in recognition of outstanding achievement and contributions to the field of Labor and Employment law. This marks a continuation of his recognition in The Best Lawyers in America since 2008, reflecting a sustained commitment to excellence, innovation, and leadership. It underscores the impact of his work within the professional community. We extend our congratulations on this well-deserved recognition.
The U.S. Department of Justice (DOJ), Civil Division is sending Civil Investigative Demands (CIDs) to federal contractors seeking information on their DEI practices, under its authority to investigate False Claims Act (FCA) claims. Flowing from President Trump’s Executive Order 14173, which seeks to limit DEI efforts, the DOJ recently launched the Civil Rights Fraud Initiative, which utilizes the FCA to investigate and pursue claims against recipients of federal funds (including federal contractors) that their DEI practices violate federal civil rights laws. The focus of these investigations will likely be: Discriminatory preferences/goals: DEI programs that assign benefits or burdens based on race, ethnicity, or national origin. Use of proxies to mask discrimination: Practices using criteria like "cultural competence" or "lived experience" as proxies for protected characteristics in hiring or promotion decisions. Segregation in the workplace: Limiting membership in affinity groups or separating employees by protected characteristics during training. Discriminatory training programs: DEI training that promotes stereotypes, excludes individuals based on protected characteristics, or creates a hostile environment. Failure to protect against antisemitism: Institutions accepting federal funds that do not adequately address antisemitism or other civil rights violations. Organizations found to be in violation of the FCA can face significant penalties, including treble damages (three times the amount of damages incurred by the government), civil penalties for each false claim, and reputational harm. As a result, all federal contractors and grant recipients should be on high alert for any communication from DOJ and should immediately notify internal counsel if any such communication is received. Please contact your FortneyScott attorney or email us at info@fortneyscott.com for additional information on how to be prepared and to respond to these DOJ investigations and other best practices recommendations.
As the Trump Administration reshapes the U.S. Department of Labor (DOL), employers and federal contractors face significant shifts in agency leadership, budget priorities, enforcement programs, and regulatory strategies. Join FortneyScott attorneys for an in-depth webinar covering what these changes may mean for your organization. Key Topics to be Covered Include: New Leadership: Review of confirmed and pending DOL appointees, including Secretary Chavez-DeRemer and Deputy Secretary Keith Sonderling. Compliance & Self-Audit Programs: Expansion of opinion letter guidance and voluntary audit initiatives across W&H, VETS, OSHA, EBSA, MSHA, and OLMS. Aggressive Deregulatory Agenda: Efforts to revoke EO 11246 regulations, registered apprenticeship affirmative action requirements, and legacy EBSA guidance. Regulatory Revisions & Enforcement: Reforms to Section 503, VEVRAA, tip-credit rules, and child labor standards — including new penalty frameworks. Status of Biden-Era Rules: Updates on independent contractor, overtime, minimum wage, and PLA-related regulations. Proposed FY2026 Budget: 35% overall reduction, including workforce downsizing and potential elimination of OFCCP, Job Corp, and the Women’s Bureau. Strategic Considerations: How the return of the PAID program and potential OFCCP self-audit options may affect employer risk exposure.
As the Trump Administration reshapes the U.S. Department of Labor (DOL), employers and federal contractors face significant shifts in agency leadership, budget priorities, enforcement programs, and regulatory strategies. Join FortneyScott attorneys on Thursday, August 14th at noon EDT for an in-depth webinar covering what these changes may mean for your organization. CLICK HERE to register. Key Topics to be Covered Include: New Leadership: Review of confirmed and pending DOL appointees, including Secretary Chavez-DeRemer and Deputy Secretary Keith Sonderling. Compliance & Self-Audit Programs: Expansion of opinion letter guidance and voluntary audit initiatives across W&H, VETS, OSHA, EBSA, MSHA, and OLMS. Aggressive Deregulatory Agenda: Efforts to revoke EO 11246 regulations, registered apprenticeship affirmative action requirements, and legacy EBSA guidance. Regulatory Revisions & Enforcement: Reforms to Section 503, VEVRAA, tip-credit rules, and child labor standards — including new penalty frameworks. Status of Biden-Era Rules: Updates on independent contractor, overtime, minimum wage, and PLA-related regulations. Proposed FY2026 Budget: 35% overall reduction, including workforce downsizing and potential elimination of OFCCP, Job Corp, and the Women’s Bureau. Strategic Considerations: How the return of the PAID program and potential OFCCP self-audit options may affect employer risk exposure. Who Should Attend: Compliance professionals, in-house counsel, HR and inclusion leaders, and anyone with responsibility for compliance with labor and employment laws.
On July 30, 2025, the U.S. Court of Appeals for the Ninth Circuit in a panel decision affirmed the District Court’s Order in Center for Investigative Reporting v. DOL compelling the DOL to disclose federal contractors’ EEO-1 reports in response to a Freedom of Information Act (“FOIA”) request. The underlying FOIA request was sent to the DOL’s Office of Federal Contract Compliance Programs (“OFCCP”) in 2022 seeking consolidated EEO-1 reports for all federal contractors filed between 2016 and 2020. DOL disclosed the EEO-1 report of non-objecting contractors but withheld from disclosure 16,755 EEO reports from 4,141 objection contractors. In its Opinion, the Ninth Circuit affirmed the District Order’s finding that EEO-1 reports are not exempt from disclosure under FOIA Exemption 4, which protects trade secrets and confidential commercial or financial information. Specifically, the Ninth Circuit found that EEO-1 report data is not “commercial” because workforce-compensation data is not designed to be bought and sold, nor does it reveal basic commercial operations, such as sales statistics, profits and losses, or inventories. The Court held that DOL failed to establish that EEO-1 reports describe an exchange of goods or services or the making of a profit. While the Ninth Circuit Order is limited to compelling the release of 2016-2020 reports in response to CIR’s FOIA request, DOL also relied on Exemption 4 to withhold the production of federal contractors’ 2021 consolidated EEO-1 reports in response to FOIA requests issued by the University of Utah and As You Sow. DOL has not issued a comment, and it is not known at this time whether the DOL will appeal this determination. FortneyScott will continue to monitor this and related cases.
