On Friday, February 21, a federal district judge in Maryland issued a nationwide preliminary injunction prohibiting the U.S. Department of Justice (DOJ) and defendant federal agencies from enforcing portions of two presidential executive orders (EOs) targeting diversity, equity, and inclusion (DEI) programs at companies that do business with the federal government, including provisions tethering allegedly unlawful DEI programs to potential False Claims Act (FCA) liability.
Despite the unusually sweeping breadth of this injunction, the Trump administration retains significant latitude to undertake actions targeting federal contractor DEI programs it believes are unlawful, and companies should carefully consider their response to the injunction.
The EOs direct all federal agencies to terminate “equity-related grants or contracts.” They also require agencies to include in federal contracts a clause requiring the contractor or grant recipient to (1) agree that its compliance with federal antidiscrimination laws is material to the government’s payment decisions for purposes of the FCA and (2) certify that it does not operate any programs promoting DEI that violate federal antidiscrimination laws.
