Early in his second term, President Donald Trump issued two executive orders targeting diversity, equity and inclusion programs at companies that do business with the federal government by imposing liability under the False Claims Act, among other potential penalties.
The executive orders were quickly challenged in National Association of Diversity Officers in Higher Education v. Trump, and in February, the U.S. District Court for the District of Maryland issued a sweeping nationwide preliminary injunction prohibiting their enforcement against all government contractors.
Last month, however, the injunction was stayed by the U.S. Court of Appeals for the Fourth Circuit, freeing the administration and whistleblowers to enforce the executive orders and pursue FCA liability for unlawful DEI programs while the litigation continues.
In light of the evolving legal landscape and the draconian potential penalties under the FCA, those doing business with the federal government should consider taking stock of any operations that could attract scrutiny for being potentially unlawful DEI programs.
