On January 20 and 21, 2025, President Trump declared “DEI” to be henceforth “illegal” and issued two executive orders aimed at eliminating DEI programs – leaving employers in the private and public sectors to wonder – what does this mean for me?
On February 21, 2025, a federal judge in the District of Maryland weighed in with an Order striking down three parts of Trump’s DEI executive orders as likely unconstitutional, in Nat’l Ass’n Of Diversity Officers in Higher Education et al v. Trump et al, 1:25cv333 (D. Md. 2025). The order temporarily stops President Trump and the other executive agency defendants[1] (including those aiding defendants) from:
- (a) pausing, freezing, impeding, blocking, cancelling, or terminating any awards, contracts or obligations;
- (b) requiring any grantee or contractor to make any “certification” or other representation pursuant to a provision in Order 14173; and
- (c) bringing any False Claims Act enforcement action, or other enforcement action, pursuant to an enforcement provision in Order 14173, including but not limited to any False Claims Act enforcement action premised on any certification made pursuant to Exec. Order 14173.
The story is not over. On Monday, the defendants in the case filed a notice of appeal with the Court of Appeals for the Fourth Circuit. It will be some time before we learn how the appeal plays out, so for now, the injunction stands. In this alert we will cover the Court’s ruling and what employers should be doing in response.
Background on the Trump DEI Orders
On the first two days in office, President Trump issued a slew of executive orders, including Exec. Order 14151, Ending Radical and Wasteful Government DEI Programs and Preferencing, Executive Order of January 20, 2025, 90 Fed. Reg. 8339 (Jan. 29, 2025), and Exec. Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, Executive Order of January 21, 2025, 90 Fed. Reg. 8633 (Jan. 31, 2025), which were aimed at DEI initiatives. DEI, short for “diversity, equity, and inclusion,” refers to goals that many organizations and agencies have to promote a diverse, equitable, and inclusive workforce.
Read our prior article with background on the orders.
The Lawsuit Challenging Provisions of the DEI Orders
On February 3, 2025, the National Association of Diversity Officers in Higher Education, American Association of University Professors, Restaurant Opportunities Centers United, and the Mayor and City Council of Baltimore, Maryland sued President Trump and other executive branch defendants in federal court in Maryland, challenging the constitutionality of three specific provisions in the Orders.
First, Exec. Order 14151 contains what the Court refers to as a “Termination Provision,” which directs federal agencies and departments to “(i) terminate, to the maximum extent allowed by law, … all … ‘equity-related’ grants or contracts” within 60 days.[2] This provision applies to anyone who receives federal grants or contracts with the federal government.
Second, Exec. Order 14173 contains what the Court refers to as a “Certification Provision,” which requires federal agencies to include in every contract or grant award a term (1) requiring the contractor 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 …” and (2) “requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable Federal antidiscrimination laws.”[3] This provision, which applies to federal contractors, sets up the government for pursuing False Claims Act cases based on inaccurate DEI certifications.
Third, Exec. Order 14173 contains what the Court refers to as an “Enforcement Threat Provision,” which instructs the Attorney General, within 120 days of the order, to submit a report to the executive branch “containing recommendations for enforcing Federal civil rights laws and taking other appropriate measures to encourage the private sector to end illegal discrimination and preferences, including DEI.” The Enforcement Threat Provision provides that the report must contain a “proposed strategic enforcement plan identifying … [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.” In addition, it directs each agency to “identify up to nine potential civil compliance investigations of publicly traded corporations, large nonprofit corporations or associations, foundations with assets of 500 million dollars or more, State and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars.”[4] This provision applies broadly to the private sector.
We refer to these three provisions as the “Challenged Provisions,” as the Court did in its Order and Memorandum and Opinion(“Decision”).
The District Court Declares the Three Challenged Provisions as Likely Unconstitutional
On Friday, February 21, 2025, Judge Adam Abelson issued a preliminary injunction and Memorandum and Opinion, striking down the Challenged Provisions as likely unconstitutional – which temporarily stops the executive agency from being able to enforce those provisions until the case can be heard on its merits. Defendants have filed a notice of appeal, seeking to overturn that decision.
After confirming that the plaintiffs had standing – which means they have a personal stake in the litigation and therefore, could bring the case, the Court held that a preliminary injunction was warranted.[5]
The decision is rooted in principles of the First and Fifth Amendment.
Under the First Amendment, which prohibits the enactment of laws “abridging the freedom of speech,” U.S. Const., amend. I, laws that target speech based on its communicative content are presumptively unconstitutional and may be justified only if the government proves that they are narrowly tailored to serve compelling state interests. Such content-based speech regulation includes “viewpoint discrimination,” which seeks to regulate speech based on “‘the specific motivating ideology or the opinion or perspective of the speaker.’”[6]
Meanwhile, the Fifth Amendment protects citizens from laws that are unconstitutionally vague, because due process requires that parties “know what is required of them so they may act accordingly.” The void for vagueness doctrine also ensures that “‘those enforcing the law do not act in an arbitrary or discriminatory way.’”[7] As the Court noted, “the requirement to avoid vagueness is particularly high when a law ‘threatens to inhibit the exercise of constitutionally protected rights,’” such as free speech.[8]
The Court explained:
[T]he administration has declared “DEI” to be henceforth “illegal,” has announced it will be terminating all “‘equity-related’ grants or contracts”—whatever the administration might decide that means—and has made “practitioners” of what the government considers “DEI” the targets of a “strategic enforcement plan.” … But the Challenged Orders do not define any of the operative terms, such as “DEI,” “equity-related,” “promoting DEI,” “illegal DEI,” “illegal DEI and DEIA[9] policies,” or “illegal discrimination or preferences,” …—let alone identify the types of programs or policies the administration considers “illegal.”
…
But it is not just the vagueness of the Challenged Provisions that renders them unconstitutional,” the Court continued. The Certification and Enforcement Threat Provisions squarely, unconstitutionally, “abridge[] the freedom of speech.” U.S. Const. amend. I. [10]
- Termination Provision
The Court held that the plaintiffs are likely to succeed on their claim that the Termination Provision is void for vagueness. The terms used in the Termination Provision, including the term “‘equity-related’ grants or contracts,” are broad, and undefined, and as drafted, the provision “invites arbitrary and discriminatory enforcement over billions of dollars in government funding.” Moreover, the law fails to provide current grantees with notice about “what is prohibited, so that they may act accordingly.”[11]
- Certification Provision
The Court next held that the plaintiffs are likely to succeed on their claim that the Certification Provision violates the First Amendment “because on its face it constitutes a content-based restriction on the speech rights of federal contractors and grantees, and further because such restriction expands to all of those contractors’ and grantees work, whether funded by the government or not.”[12] The “sole purpose” of the Certification Provision is for federal contractors and grantees “to confirm under threat of perjury and False Claims Act liability that they do not operate any programs promoting DEI that the government might contend violate federal anti-discrimination laws.”[13] Such a restriction is “precisely a ‘condition[] that seek[s] to leverage funding to regulate speech outside the contours of the program itself,’” and moreover, unconstitutionally restricts speech within the scope of pertinent programs by “punish[ing] government contractors or grantees ‘because of their speech on matters of public concern.’”[14]
- Enforcement Threat Provision
Finally, the Court found that the plaintiffs are likely to succeed on their claim that the Enforcement Threat Provision, which applies broadly to the private sector, violates the First Amendment. The Court referred to the provision as “textbook viewpoint-based discrimination,” because it “threatens to bring enforcement against perceived violators of undefined standards, and is, on its face, an unlawful viewpoint-based restriction on protected speech.” Decision at 50-51. In addition, the enforcement provision is unconstitutionally vague under the Fifth Amendment because it threatens the “private sector” with enforcement actions based on vague, undefined standards.
After finding that the other three elements for a preliminary injunction were met, the Court issued an order applicable to parties and non-parties, finding the Challenged Provisions unconstitutional.
What Does This Mean for Employers?
The Decision boils down to this – the Challenged Provisions left contractors, employees, and recipients of public grants with no idea whether the administration will deem the work they are doing to be “equity-related,’ and the private sector at a loss for whether the administration will deem a particular policy, program, discussion, announcement, etc. to be among the “preferences, mandates, policies, programs, and activities” the administration now deems “illegal.” Moreover, the Challenged Provisions seek to restrict speech that the government disagrees with – and such “viewpoint discrimination” is squarely unconstitutional under the First Amendment.
So now that a Court has held these provisions to be unconstitutional, what should employers do?
Unfortunately, there is no simple answer to that question. The best thing to do is continue to monitor the news and stay in touch with your employment law attorney.
If you are a recipient of federal grant money that you believe may be related to DEI programs, you should still be receiving that money while the injunction is in effect. If you are a federal contractor, you should not have to make these new certifications about DEI. However, if you see new certification language in your federal contracts or grants, contact your attorney. As discussed above, the new materiality language could open up federal contractors to False Claims Act lawsuits for false “DEI certifications”, which may bring civil and criminal liability. Our White Collar Defense team is experienced in defending False Claims Act cases and related investigations.
Finally, if you are a private sector employer concerned about the risk of enforcement action, rest assured that, at least for now, no such actions can be taken. Moreover, the Attorneys General of Massachusetts, Illinois, Arizona, California, Connecticut, Delaware, Hawaii, Maine, Maryland, Minnesota, Nevada, New Jersey, New York, Oregon, Rhode Island, and Vermont issued a guidance on February 13, 2025, to help private sector employers better understand Exec. Order 14173. That guidance encourages employers that “diversity, equity, inclusion, and accessibility best practices are not illegal,” and that the Exec. Order 14173 “cannot and does not prohibit” the lawful “policies and practices that promote diversity, equity, inclusion, and accessibility.” Moreover, such policies, the AGs remind employers, “help to reduce litigation risk by affirmatively protecting against discriminatory conduct that violates the law.” Thus, you should continue to keep in place policies that promote diversity, equity, inclusion, and accessibility, and protect your employees against illegal discrimination.
However, this issue is a hot button topic for the Administration, which has already appealed the order to the Fourth Circuit. Accordingly, employers should review their policies and practices to ensure they do not contain any illegal preferences or quotas. Moreover, employers need to stay apprised as the changes continue to come. Hinckley Allen will continue to monitor the Fourth Circuit appeal, and provide prompt updates on major changes within the landscape of DEI.
[1] Defendants in Diversity Officers in Higher Education et al v. Trump et al, 1:25cv333 (D. Md. 2025) are: Donald J. Trump, Dorothy Fink, Department of Health and Human Services, Department of Education, Denise Carter, Department of Labor, Vincent Micone, Department of Interior, Doug Burgum, Department of Commerce, Jeremy Pelter, Department of Agriculture, Gary Washington, Department of Energy, Ingrid Kolb, Department of Transportation, Sean Duffy, Department of Justice, James McHenry, National Science Foundation, Sethuraman Panchanathan, Office of Management and Budget, Matthew Vaeth.
[2] Exec. Order 14151 § 2(b)(i).
[3] Exec. Order 14173 § 3(b)(iv).
[4] Exec. Order 14173§ 4(b)(iii).
[5] Preliminary injunctions allow a court to issue immediate relief in limited circumstances, where a plaintiff has established that (1) that they are likely to succeed on the merits; (2) that they are likely to suffer irreparable harm absent relief; (3) that the balance of equities favors them; and (4) that an injunction is in the public interest.
[6] Decision at 30-31 (quoting Reed v. Town of Gilbert, Ariz., 576 U.S. 155, 163, 168 (2015)).
[7] Decision at 37 (citing F.C.C. v. Fox Television Stations, Inc., 567 U.S. 239, 253 (2012)).
[8] Decision at 38 (citing Hoffman Estates, 455 U.S. at 499).
[9] Exec. Order 14151 defines this phrase as “diversity, equity, inclusion, and accessibility.” § 2(a).
[10] Decision at 2-3 (citing Exec. Order 14151 §§ 1-2; Exec. Order 14173 §§ 1-4).
[11] Decision at 38-43.
[12] Decision at 45 (citing Exec. Order 14173 § 3(b)(iv)(B)).
[13] Id.
[14] Decision at 48 (citing Wabaunsee County, 518 U.S. at 675).
