In January 2025, President Trump issued two Executive Orders (“EO”) aimed at eradicating illegal diversity, equity, and inclusion (“DEI”), as well as a fact sheet related to the same. In our first alert regarding these EOs, which can be found here, we reviewed one EO’s recission of a federal contractor’s requirement to prepare affirmative action plans for women and minorities. This Part II alert focuses on the DEI-related provisions of the January EOs and a February 21, 2025, Court order preliminarily enjoining, in part, the administration from enforcing them.
January 20, 2025, EO Ending Radical and Wasteful Government DEI Programs and Preferencing
In his January 20th EO entitled “Ending Radical And Wasteful Government DEI Programs And Preferencing” (“J20 EO”), President Trump directed the Director of the Office of Management and Budget (“OMB”), assisted by the Attorney General and the Director of the Office of Personnel Management (“OPM”), to “coordinate the termination of all discriminatory programs, including illegal DEI and ‘diversity, equity, inclusion, and accessibility’ (DEIA) mandates, policies, programs, preferences, and activities in the Federal Government, under whatever name they appear.” While the initial instruction in the EO referred to “illegal” DEI, other instructions in the EO did not include the caveat “illegal.” For example, each agency was to identify “[f]ederal grantees who received Federal funding to provide or advance DEI, DEIA, or ‘environmental justice’ programs, services, or activities since January 20, 2021.”
January 21, 2025, EO Ending Illegal Discrimination and Restoring Merit-Based Opportunity
On January 21, 2025, President Trump issued an EO titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (“EO J21”). In addition to eliminating federal contractor requirements to prepare affirmative action plans for women and minorities (as discussed in our Part 1 alert), EO J21:
- Directed all executive agencies to “include in every contract or grant award” a certification enforceable through the False Claims Act, that the contractor and grantee “does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws” (the “Certification Provision”).
- Ordered federal executive departments and agencies to “terminate . . . ‘equity-related’ grants or contracts” (the “Termination Provision”).
- Warned private employers and institutions of higher education against implementing and maintaining illegal DEI programs and directed the Department of Justice (“DOJ”) to identify up to nine potential civil compliance investigations of publicly traded corporations, large non-profit 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 (the “Enforcement Threat Provision”).
What is “Illegal DEI” under the EOs?
Neither EO J20, EO J21, nor the related fact sheet defines what the administration considers to be illegal DEI or DEIA (diversity, equity, inclusion, and accessibility). Under the specific directive of EO J21, incorrectly determining what the administration considers to be “illegal DEI” comes at a significant cost. It can mean a violation of the False Claims Act by improperly certifying compliance. It can mean termination of your federal grant. It can mean a DOJ investigation.
Certainly, organizations can and will reference existing Court decisions to evaluate whether their DEI programs pass legal muster. But many are also paying attention to recent agency directives such as the Department of Defense’s instruction to cease celebrating heritage months (for example, Black History Month) and attending diverse outreach and recruiting events. Given these concerns, many organizations have already begun to roll back or reframe their DEI programs based on the ambiguity of what “illegal DEI” means. At the same time, many are concerned that the administration is taking a broad view of illegal activity not supported by existing law.
The Dear Colleague letter the Department of Education released on February 14, 2025 provides an additional perspective on the administration’s views related to DEI efforts. In this Dear Colleague Letter, the Department of Education announced its view on the application of the Supreme Court’s Students for Fair Admissions v. Harvard (“SFFA") decision. This is just one example of the administration taking a broad view of what the law is concerning non-discrimination—here, specifically those laws are the Equal Protection Clause and Title VI of the Civil Rights Act.
In the Department of Education’s view, the SFFA decision, which eliminated the use of race as a preference in admissions decisions, applies to all aspects of education, including “using race in decisions pertaining to admissions, hiring, promotion, compensation, financial aid, scholarships, prizes, administrative support, discipline, housing, graduation ceremonies, and all other aspects of student, academic, and campus life.”
The Dear Colleague Letter does not have the force of law. However, it provides educational institutions with the Department of Education’s enforcement objectives. Moreover, the Dear Colleague Letter advised institutions the Department of Education would begin to assess compliance within 14 days (February 28th). The Dear Colleague Letter warns that institutions not in compliance could risk losing their federal funding. The Department of Education’s interpretation of the non-discrimination laws is similar to the J20 and J21 EOs—broad and carrying significant consequences.
February 21 Nationwide Injunction on Crucial Parts of DEI Executive Orders
On February 21, 2025, the United States District Court for the District of Maryland issued a broad preliminary injunction prohibiting the administration from enforcing the Termination Provision, Certification Provision, and certain parts of the Enforcement Threat Provision of the J20 and J21 Executive Orders. In a 63-page memorandum opinion, the Court explained that the:
- Termination and Enforcement Threat provisions are unconstitutionally vague on their face in violation of the Fifth Amendment’s Due Process Clause; and
- Certification and Enforcement Threat provisions are also unconstitutional because they abridge the freedom of speech.
Specifically, the Preliminary Injunction Order states:
Defendants other than the President, and other persons who are in active concert or participation with Defendants (the “Enjoined Parties”), shall not:
a. pause, freeze, impede, block, cancel, or terminate any awards, contracts or obligations (“Current Obligations”), or change the terms of any Current Obligation, on the basis of the Termination Provision;
b. require any grantee or contractor to make any “certification” or other representation pursuant to the Certification Provision; or
c. bring any False Claims Act enforcement action, or other enforcement action, pursuant to the Enforcement Threat Provision, including but not limited to any False Claims Act enforcement action premised on any certification made pursuant to the Certification Provision.
In a nutshell, plaintiffs argued, and the Court agreed, that because the EOs do not define the operative terms, such as “DEI,” “equity-related,” “promoting DEI,” “illegal DEI,” “illegal DEI and DEIA policies,” or “illegal discrimination or preferences,” let alone identify the types of programs or policies the administration considers “illegal”, they are unconstitutionally vague in violation of the Fifth Amendment’s Due Process Clause. This clause requires that parties “know what is required of them so that they may act accordingly” and clear guidance ensures that “those enforcing the law do not act in an arbitrary or discriminatory way.” On this subject, the Court stated “[t]he Termination Provision leaves those contractors and their employees, plus any other recipients of federal grants, with no idea whether the administration will deem their contracts or grants, or work they are doing, or speech they are engaged in to be “equity-related.” It also gave the following examples:
The possibilities are almost endless, and many are pernicious. If an elementary school receives Department of Education funding for technology access, and a teacher uses a computer to teach the history of Jim Crow laws, does that risk the grant being deemed “equity-related” and the school being stripped of funding? If a road construction grant is used to fill potholes in a low-income neighborhood instead of a wealthy neighborhood, does that render it “equity-related”? If a university grant helps fund the salary of a staff person who then helps teach college students about sexual harassment and the language of consent, would the funding for that person’s salary be stripped as “equity-related”? If a business with a grant from the Small Business Administration conducts a recruiting session at a historically Black college or university, could the business be stripped of the grant on that basis?
The Court also agreed with plaintiffs’ argument that the EOs violated the Free Speech Clause of the First Amendment of the U.S. Constitution. The Court found that the EOs constituted content discrimination and viewpoint discrimination in violation of the First Amendment. As an example, the Court stated:
The language of the Certification Provision makes clear that the sole purpose of the provision, regardless of the individualized implementation by executive agencies, 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. J21 Order § 3(b)(iv). This is precisely a “condition[] that seek[s] to leverage funding to regulate speech outside the contours of the program itself.” Agency for Int’l Dev. v. All. For Open Soc’y Int’l, Inc., 570 U.S. 205, 214-15 (2013).
This order was not limited to the administration’s actions against plaintiffs but applies nationwide. For prudential and separation of powers reasons, the Court did not enjoin the Attorney General from preparing the report pursuant to the J20 Order or engaging in investigation. Additionally, this case did not involve or enjoin EO J21’s recission of Executive Order 11246 (women and minority AAPs), so that part of EO J21 remains.
What’s Next?
While the Court’s preliminary injunction provides some comfort that the administration will need to further define what it finds objectionable prior to holding contractors accountable under the False Claims Act or terminating contracts or grants, the legal battle is not likely over. We expect the administration to appeal. Additionally, the Court did not enjoin the administration from conducting investigations.
In the meantime, we recommend that both private employers, federal contractors, and educational institutions conduct a privileged assessment of their programs potentially involving diversity, equity, and inclusion based upon existing law and areas of uncertainty. Additionally, it is important that employers also remember their obligations under several non-discrimination and equal employment opportunity laws, such as Title VII and the Americans with Disabilities Act, and if you are a covered contractor, Section 503 and the Vietnam Era Veterans’ Readjustment Assistance Act.
Please reach out to your Michael Best attorney if you would like further guidance and assistance.