Takeaways

• • The Trump administration’s DEI executive order could expose organizations with DEI programs to False Claims Act liability, significantly impacting those receiving federal funds.
  • The executive order requires government contracts to include provisions stating that compliance with federal anti-discrimination law is material for purposes of the False Claims Act.
  • The real-world impact of the executive order lies in the pressure it creates to settle any FCA claim based on an illegal DEI program, regardless of its merit.

One of the Trump administration’s most talked about executive orders targets private sector DEI programs. Among its litany of enforcement tools and methods designed to encourage the private sector to end DEI programs, two seemingly technical provisions may have the widest impact. These provisions expose all entities that have DEI programs and receive federal money to potential liability under the False Claims Act. If the Order withstands legal challenges, the Trump administration may have unleashed the powerful animal that is the FCA—with its treble damages, civil penalties, and generous bounties to whistleblowers—on companies of all sizes that receive federal money directly or indirectly. This includes all healthcare providers, universities, and other private employers that are government contractors or grant recipients.

The DEI executive order, titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” is divided into two...

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