The executive order retracts several longstanding executive orders related to DEI initiatives, affirmative action and workforce balancing.
The January 21, 2025, executive order entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” takes aim at “diversity, equity, and inclusion” (DEI) and/or “diversity, equity, inclusion, and accessibility” (DEIA) initiatives in private industries, which the order asserts violate federal civil rights laws. The executive order specifically identifies higher education institutions receiving federal funding as a principal focus of such enforcement efforts.
The executive order directs all federal agencies to terminate, effective immediately, “all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements” and to “enforce our longstanding civil-rights laws and to combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.”
Impact of the Executive Order
The significant actions directed by the executive order will have the following effects:
Ends Government Contracting DEI Obligations
The executive order retracts several longstanding executive orders related to DEI initiatives, affirmative action and workforce balancing. Each federal agency is directed to require inclusion in every contract or grant award: (A) a term requiring the contractual counterparty or grant recipient 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 federal False Claims Act; and (B) a term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable federal anti-discrimination laws.
Requires Issuance of Guidance for Compliance with Students for Fair Admissions v. Harvard
Within 120 days of the executive order, the attorney general and the secretary of Education must jointly issue guidance to all state and local educational agencies that receive federal funds, as well as all institutions of higher education that receive federal grants or participate in the federal student loan assistance program under Title IV of the Higher Education Act, 20 U.S.C. 1070 et seq., regarding the measures and practices required to comply with Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, 600 U.S. 181 (2023).
Enforcement Target Identification, Including Institutions of Higher Education Institutions
The attorney general and agency heads must submit to the president’s assistant for domestic policy a report with recommendations for ending DEI within 120 days of the executive order. The report must identify: (i) key industry sectors of concern within each agency’s jurisdiction; (ii) the most egregious and discriminatory DEI practitioners in each sector of concern; and (iii) a plan of specific steps or measures to deter DEI programs or principles (whether specifically denominated “DEI” or otherwise) that constitute illegal discrimination or preferences.
False Claims Act Violation Risks
In particular, the executive order’s directives to federal agencies raise significant potential False Claims Act investigation and enforcement risk for institutions of higher education in receipt of government funding. The reach of the executive order and its increased False Claims Act risks would include Title IV funding and government grants and contracts—including funding for academic and scientific research.
The executive order contemplates a constellation of grant and contract terms, regulatory and subregulatory agency guidance and certifications by funding recipients that appear designed to impose institutionwide policy and practice obligations and prohibitions as a condition of receipt of any federal funding for any purpose. The executive order also signals aggressive use of investigations and litigation by the attorney general and agencies, of which the Department of Education is included, to enforce such obligations. As a whole, the executive order would appear to contemplate the use of the federal False Claims Act as a dominant tool in those investigative and enforcement efforts.
For additional discussion of the executive order in the employment context, please see our previous Alert.
Additional Requirements Under the Executive Order
The executive order directs the attorney general and funding agencies to prepare a report identifying industries and institutions “of concern” that the Department of Justice and funding agencies view as “the most egregious and discriminatory DEI practitioners,” and planned enforcement measures. In directing the attorney general and agencies to identify the industries and institutions on which these enforcement measures will be focused, the executive order expressly identifies institutions of higher education as among those industries and institutions “of concern,” and calls upon the attorney general and funding agencies to identify specific investigations it will undertake of such higher education institutions’ practices. To meet that directive, the Department of Education is required to identify up to nine potential civil compliance investigations of institutions of higher education with endowments of over $1 billion.
Additionally, the executive order “encourages” the attorney general and agencies to identify “litigation that would be potentially appropriate for federal lawsuits, intervention, or statements of interest” to be brought against such institutions. While the executive order’s contemplation of certifications of compliance and terms and conditions of materiality under the False Claims Act already make clear that the chief litigation vehicle for such “federal lawsuits” would be the False Claims Act, the executive order’s reference to “intervention” and “statements of interest” are a reference to the qui tam False Claims Act actions brought by private litigants. The executive order’s language would appear to be an invitation to “whistleblowers” that the government may be interested in pursuing such cases based on allegations of discrimination arising from DEI efforts. The executive order further recommends that the Department of Education inform the administration of potential regulatory action and subregulatory guidance that would violate the executive order so that it may take additional action.
What This Means for Institutions of Higher Education
The Trump administration’s shift away from current DEI or DEIA policies and guidance will likely require significant policy changes from most institutions of higher education participating in Title IV, Higher Education Act, programs. All institutions of higher education receiving federal funding of any kind—including those in receipt of federally funded grants and contracts, and Title IV or Higher Education Act funding—should begin to identify and evaluate carefully school operations, policies and business relationships across their institutions that may fall within the ambit of the agency and Department of Justice efforts contemplated by the executive order in preparation for anticipated new directives and guidance.
As noted, federal agencies are directed to identify potential litigation or federal lawsuits for violation of the civil rights laws as interpreted by the executive order. Because compliance with the Civil Rights Act of 1965 is part of the Title IV eligible institutions program participation agreement, the Department could limit, suspend or terminate an institution’s participation in Title IV programs for civil rights violations per the executive order. Violations also could subject institutions to claims under the False Claims Act.
Institutions should work with experienced higher education and employment counsel to evaluate changes to their compliance strategies and efforts moving forward. Institutions should review and prepare strategies for complying with new federal policies as they are issued, as well as strategies for responding to investigative and enforcement efforts under the False Claims Act or otherwise.
For More Information
If you have any questions about this Alert, please contact any of the attorneys in our Higher Education Group or the attorney in the firm with whom you are regularly in contact.
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