Under Executive Order 14173, federal contractors are required to certify that their Diversity, Equity, and Inclusion (DEI) programs comply with all applicable federal anti-discrimination laws. This certification must be included as a clause in every federal contract or grant, asserting that the contractor does not operate any DEI programs that violate these laws.
As a result, many contractors are reassessing their internal policies and considering third-party legal reviews before signing mandatory certifications.
Doug Kauffman, partner in Balch & Bingham’s Labor & Employment Practice, answers questions about what contractors need to know and how a legal audit can help mitigate risk.
What are the legal implications for federal contractors who certify that they are not promoting DEI in a manner that violates federal anti-discrimination laws?
With any type of certification associated with a federal contract, there are legal obligations to ensure that the person who is signing the certification has performed an appropriate level of due diligence to ensure that what is being required to be certified is in fact accurate.
A false statement to the government is not something that will be taken lightly and could come with legal consequences. The certification could raise claims under the False Claims Act if someone is able to show that the federal contractor is engaging in illegal or discriminatory DEI initiatives contrary to the statement contained in the certification.
It is worth noting that the certification requirement is currently subject to litigation challenges currently that will eventually need to be decided by the courts.
How can contractors determine whether their current DEI programs comply with federal anti-discrimination laws?
The first step is to review agency guidance that provides some limited boundaries to what DEI initiatives might be discriminatory.
While governmental memorandums, public announcements, and agency requests to some employers might not be “the law,” they cannot be ignored in the review process. These communications, in some cases, have identified certain practices and initiatives as illegal forms of DEI.
The second step is to review the DEI initiatives carefully to determine if they are exclusive or available to only one particular group such as race and gender and whether they bestow some level of benefit or advantage, such as mentoring, leadership development, and certainly a leg up on advancement and recognition. Unfortunately, while things are a little gray, it’s more of an art than a science with respect to some DEI initiatives.
What role can a third-party legal audit play in helping contractors evaluate and feel more comfortable before signing the certification?
Having a third-party with legal expertise in evaluating DEI initiatives for various industries is very helpful in benchmarking any risks. An outsider also can be more objective and take “the heat” for raising red flags.
Most importantly, the individual who signs the certification may want a thorough and objective review by a third-party with expertise to support their certification. Having that third-party audit and opinion could be important in defending any challenges to the certification to show that the person who signed the certification acted in good-faith and without any intent to provide a false statement to the government.
