Trump Administration Allowed to Proceed with Enforcement of Anti-DEI Orders

On March 14, 2025, the U.S. Court of Appeals for the Fourth Circuit lifted the nationwide injunction preventing enforcement of Executive Order 14173, which targeted diversity, equity, and inclusion (DEI) efforts.  
While EO 14173 still faces multiple legal challenges, for now the administration can continue to implement all provisions. Of particular interest to federal contractors, that means the administration is free to move forward with a key component of the Executive Order which requires the inclusion of a new certification requirement in federal contracts. Under EO 14173, all federal agencies are to include two new terms in federal contracts: (1) a term stating that the contractor does not “operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws” and (2) a term stating that the contractor agrees that compliance with these laws is material to the government’s payment obligations under the False Claims Act. 

Prior to the injunction issued on February 21, 2025 preventing enforcement of this element of EO 14173, federal contractors were seeing these clauses being inserted into new contracts and contract amendments. The issue with the certification requirement, as envisioned by the executive order and as seen in actual contracts prior to the injunction, is that the certification is does not define key terms such as, “program,” “promote,” or “DEI.” The Fourth Circuit litigation, as well as other pending lawsuits, argue that the lack of definition makes the requirement unconstitutionally vague. 

These lawsuits may still lead to the Trump administration formally defining key terms and provisions. It may also simply lead to the removal of references to “programs promoting DEI.” The scope and meaning of the certification provision might not be different either way. With or without the DEI reference, the contractor is being asked to certify that none of the organization’s policies or practices, or their myriad interactions, is resulting in illegal discrimination under federal law. 

Note that the contract provision does not ask whether the contractor has non-discrimination policies in place; instead, the certification is really aimed at whether any of the organization’s policies are having a discriminatory effect. 

And the certification provision is to be enforced under the False Claims Act—that provision is not in dispute. Under the False Claims Act, an organization can be liable for either knowingly or recklessly providing false information to the federal government for the purpose of getting paid. In other words, certifying without performing some level of due diligence creates risk, whether or not any illegal discrimination occurs. 

Put another way, someone will have to certify that the organization’s policies and practices are not resulting in violations of federal non-discrimination laws. And that someone will need to have some basis for that certification. 

Ironically, one of the best tools employers had for monitoring their vast employment landscapes for potential systemic discrimination was the “affirmative action plan.” Since preparing EO 11246 AAPs is not illegal (it is just not required), the non-discrimination, or adverse impact, analyses previously prepared as part of an annual EO 11246 AAP are still likely to be a good starting point. In fact, it served as the starting point for Berkshire’s new “Non-Discrimination Workforce Analytics.” This suite of analytics was developed to help organizations better monitor for potential systemic discrimination by tailoring the analytics more closely to the way your organization actually operates, and to serve as the basis for the new certification provision. 

Whatever your organization chooses to do, we strongly recommend that you do something to monitor the effects of your policies and procedures from the perspective of sex and race discrimination. Otherwise, the new certification requirement in federal contracts could leave the organization vulnerable to a False Claims Act violation. We also recommend that contractors conduct a thorough review of their DEI policies and practices.  

Berkshire will continue to carefully monitor this issue and bring you relevant news as it develops. Click here to ensure you are signed up to receive Berkshire notifications.