President Trump's executive order (E.O.) aimed at "ending illegal discrimination and restoring merit-based opportunity" commonly referred to as the “Anti-DEI” E.O., has some important legal ramifications for companies engaged in or pursuing federal contracts. Whether one is in favor or not, the order has a long reach building on the landmark 2023 Supreme Court ruling against Harvard that found the university illegally engaged in racial discrimination in violation of the Equal Protection Clause of the 14th Amendment. At the time of the ruling, there was a great deal of speculation as to whether or not the same interpretations or findings would apply to private sector companies.
That application may be at hand for virtually every major corporation, foundation, and university if they segregate, hire, or make preferences based on racial identity. The E.O. appears to be much more encompassing than what had been originally believed at first glance. The order includes text that notes federal contracts and grants will soon carry a new certification stipulating that parties doing business with the government must adhere to colorblind policies. Failure to abide by these rules will run the risk of violating 3729(b)(4) of Title 31 of federal law. Applying the False Claims Act, (around since the Civil War), is a game-changer. The Claims Act provides significant damages against firms found in violation of federal contracting rules – without the dollar limitations curtailing exposure typically applied when using Title VII of the 1964 Civil Rights Act, which has a $300,000 compensatory and punitive damages cap for corporations over 500 employees.
The E.O. does not change the terms of any existing contract or grant, it directs revisions as soon as 90 days or until April 25, 2025.
For details see, Executive Order 14151: “Ending Radical And Wasteful Government DEI Programs And Preferencing” [Issued on January 20, 2025; 2025-01953 (90 FR 8339)]. At: https://www.federalregister.gov/documents/2025/01/29/2025-01953/ending-radical-and-wasteful-government-dei-programs-and-preferencing
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