What Happened?

On Friday, January 21, 2025, the U.S. District Court of Maryland issued a Preliminary Injunction (“PI”) pausing the federal government’s enforcement of three provisions of President Trump’s Anti-Diversity, Equity and Inclusion (“DEI”) Executive Order 14173 “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (the “DEI EO”).

We expect the Trump administration to quickly appeal the PI.

What the PI does, and doesn’t, do:

• It does not address, pause or reverse the revocation of Executive Order (“EO”) 11246 regarding race and gender affirmative action for government contractors. EO 11246 remains revoked and federal contractors continue to have the option to comply with EO 11246’s regulatory scheme until April 21, 2025.
• The PI is just that – preliminary – it is not a final decision that any part of the DEI EO is not enforceable. However, it does preliminarily conclude that the paused provisions of the DEI EO are vague and/or infringe on employers’ constitutional right to free speech.
• The Administration almost certainly will appeal the decision, and we expect it will be committed to litigating and ultimately prevailing on the enforceability of the DEI EO.

The EO provisions aimed at federal contractors and private employers are the:

Enforcement Threat Provision

As the District Court put it, the EO contains an “Enforcement Threat Provision,” which, among other requirements, directed the Attorney General, in consultation with federal Agency heads, to:

• Submit “recommendations for enforcing Federal civil-rights laws and taking other appropriate measures to encourage the private sector [federal contractors and other private employers] to end illegal discrimination and preferences, including DEI.”
• Include 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.” As a part of this plan, the DEI EO directed each Agency to identify up to nine large publicly traded corporations for DEI investigations.

Certification Provision

The DEI EO requires Agencies to include, in contracts and grant awards, language confirming that a contractor’s “compliance in all respects with all applicable Federal anti-discrimination laws,” is “material” to the contract. and requires each contractor to “certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.” The Certification Provision explicitly invokes the False Claims Act, a law which has the potential to cause significant liability for allegedly false claims to the federal government. Until the issues are decided in the current case, the District Court’s PI directs that the administration cannot:

• Require any contractor or grantee to “make any certification…pursuant to the Certification Provision”; or
• Bring any enforcement action pursuant to the DEI EO whether under the False Claims Act or other law.

What Does It Mean, For Now?

The DEI EO did not define “illegal DEI” beyond prohibiting unlawful “preferences” in employment decisions based on race and gender or other protected characteristics – which already is prohibited by Title VII of the Civil Rights Act of 1964. Thus, with the PI, the District Court appears to seek to temporarily restore the status quo that existed prior to the DEI EO. As a result, employers should continue to comply with Title VII, both with respect to their DEI programs and regarding their EEO compliance, generally.

For employers, decisions whether to pause, modify or continue unchanged with DEI efforts will continue to be difficult for several reasons, including that we may not have a final decision in this legal battle for the foreseeable future.

If Silberman Law can provide guidance to help your organization assess and make decisions regarding your DEI and EEO compliance efforts, simply reply to this Alert, or contact the Silberman Law legal professional with whom you work.