Labor & Employment Law Daily Wrap Up, EXPERT INSIGHTS—Federal judge restrains liability for alleged false DEI certifications, (Apr 9, 2025)

Law Firms Mentioned:Foley & Lardner

Organizations Mentioned:Foley & Lardner, LLP

By Lisa Noller, Lori R. Garber, and Ryan J. Lowry of Foley & Lardner

President Trump's January 21 Executive Order targeting Diversity, Equity, and Inclusion Programs (DEI) (the "January 21 Executive Order") and, specifically, §3(b)(iv)) (the Certification Provision) cannot be the basis for liability—at least for one proactive litigant in the Northern District of Illinois. The holding could have broader implications for False Claims Act (FCA) defendants concerned about evolving certification requirements.

On January 20 and 21, 2025, President Trump issued two executive orders targeting Diversity, Equity, and Inclusion programs (titled, "Ending Radical and Wasteful Government DEI Programs and Preferencing" and "Ending Illegal Discrimination and Restoring Merit-Based Opportunity," respectfully). The January 21 Executive Order included a direction to agencies (the "Certification Provision") to require federal grant recipients to certify they do not "operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws" and to "agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government's payment decisions for purposes of [the FCA]." Immediately, this provision raised concerns that the Trump Administration may use the Certification Provision to bring FCA cases against grant recipients who do not comply. The threat of FCA litigation is paused for now, at least for Chicago Women in Trades (CWIT).

In February 2025, CWIT sued the Trump administration arguing, among other things, the Certification Provision violates its First Amendment Right to free speech because it "effectively regulates CWIT's conduct outside of the contours of the federal grants." (See Chicago Women in Trades v. Trump et al., Case No.1:25-cv-02005, N.D. Ill.)In response, the government argued the Certification Provision only implicates "illegal" DEI programs and no one has a constitutional right to violate the law. On March 27, 2025, U.S. District Court Judge Matthew Kennelly granted CWIT's motion for a Temporary Restraining Order, preventing the Department of Labor from enforcing the Certification Provision and the Government from "initiat[ing] any False Claims Act enforcement against CWIT pursuant to the Certification Provision."

In its Order, the court held the Certification Provision's definition of what is an illegal DEI program is "left entirely to the imagination." In the court's view, the government has emphasized that conduct violating anti-discrimination laws has changed, and the government also has been "unwilling to in (in its briefs or at argument) define how it has changed." This uncertainty put CWIT (and other grantees) in a difficult position—they must either decline to make a certification and lose federal grant money or risk making a certification that is later deemed to be false because the meaning of an illegal DEI program is unknown, subjecting "the grantee to liability under the False Claims Act."[1]

While the Order restricts the Government specifically with respect to CWIT and the Certification Provision, lawsuits like CWIT's will force federal courts across the country to determine what the Certification Provision means for FCA litigation going forward.

If you have questions about President Trump's January 21 Executive Order or the False Claims Act, contact the authors or your Foley relationship lawyer.

Footnotes

The court also said even if the government did define an illegal DEI program, the January 21 executive order still reads as an "express reference to First Amendment-protected speech and advocacy."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Lisa Noller, Lori R. Garber and Ryan J. Lowry

Foley & Lardner

321 North Clark Street, Suite 3000

Chicago

United States

Tel.: +1 312 832 4500

E-mail: info@foley.com

URL: www.foley.com/

Attorneys: (Foley & Lardner).

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