Federal Court Partially Blocks Trump’s DEI Executive Orders, Adding to Compliance Uncertainty for California Employers and Federal Contractors

Key Takeaways

• A federal District Court in Maryland has temporarily blocked, nationwide, portions of two of President Trump’s Executive Orders restricting DEI (Diversity, Equity, and Inclusion) programs within the federal government and for private employers.
• There is significant uncertainty about how this preliminary injunction will fare on appeal, and about how the Trump Administration will define “illegal DEI” and use federal authority to eliminate DEI initiatives regardless of the court.
• California-based employers and federal contractors and grantees face a delicate balance in complying with California laws and regulations and balancing federal anti-DEI initiatives spearheaded by the Trump administration.

Analysis

On January 20, 2025, President Trump signed Executive Order (“EO”) 14151, “Ending Radical Government DEI Programs and Preferencing.”  EO 14151 directs the federal government to terminate all mandates, policies, programs, preferences, and activities relating to diversity, equity, inclusion, and accessibility (DEIA), and requires that federal agencies report a list of all employees in DEI positions within 60 days.

On January 21, 2025 President Trump signed an EO 14173 titled, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” EO 14173 directs federal departments block contracts to private entities that have DEIA policies or initiatives and prohibits “illegal DEI” affirmative action policies, practices, and programs in the federal government and private sector.

The U.S. District Court for the District of Maryland is overseeing a lawsuit, National Association of Diversity Officers in Higher Education et al. v. Trump et al., Dkt. No. 1:25-cv-00333 (D. Md. Feb. 21, 2025), in which plaintiffs, including higher education organizations and the Mayor and City Council of Baltimore, MD., are challenging EO 14151 and EO 14173 on the grounds they are unlawful and unconstitutional. Plaintiffs requested a preliminary and permanent injunction enjoining the Defendants other than President Trump from enforcing the EOs.

The lawsuit is narrowly focused on three provisions of the Executive Orders, those which: (1) order all federal executive agencies to “terminate . . . ‘equity-related’ grants or contracts;” (2) require all federal executive agencies to include a certification in “every contract or grant award,” that the contractor or recipient “does not operate any programs promoting DEI” in violation of federal anti-discrimination law; and (3) direct the U.S. Attorney General to take “appropriate measures,” such as enforcement activity, to encourage the private sector to end “illegal discrimination and preferences, including DEI.”

Plaintiffs raised various Constitutional challenges to these provisions, notably that they are unconstitutionally vague in violation of due process (both in terms of what “DEI” means in these Orders and how to comply with the order to terminate certain programs) and that the provisions constitute viewpoint discrimination in violation of the Free Speech Clause.

The District Court’s preliminary injunction is far from last word on the challenged provisions, however. First, the Trump Administration is likely to take a narrow view of the scope of this injunction and may direct federal agencies that were not named as Defendants to continue implementing the EOs. In particular, it remains unclear if and how the federal Equal Employment Opportunity Commission, which was not named as a Defendant, will implement the direction of the Trump Administration. Second, the District Court’s preliminary injunction is in the process of being appealed to the Fourth Circuit Court of Appeals, with the possibility of a stay on the preliminary injunction and/or reversal on the merits in that forum. Intervention by the U.S. Supreme Court, which in its blockbuster 2023 Students for Fair Admissions case overturned affirmative action in university admissions, adds further uncertainty. Private employers and recipients of federal funds in California should therefore stay engaged with this issue to be in the best position to navigate this legal uncertainty while maintaining their corporate cultures, values, and brands.

The Trump Administration’s DEI Executive Orders raise important legal compliance questions for California-based federal contractors, subcontractors and private employers, both because their obligations under California law have not changed. While much of the coverage of the DEI Executive Orders has focused on recipients of federal funds as contractors or grantees, private employers in California also face uncertainty in how to simultaneously comply with state laws, including state regulatory and reporting obligations, and federal directives opposing DEI. Although some important elements of the Executive Orders are enjoined—for now—California employers should consult legal counsel to keep up to date with these rapidly evolving legal developments as they review policies such as employee handbooks and workforce programs, as well as at every step of state and federal regulatory compliance processes.

Should you have questions about inclusion and diversity in recruitment, retention and employment— or about your own DEI programs, please contact Camille Hamilton Pating, Janice Brown, or Nadia Bermudez.

Meyers Nave has a robust Labor and Employment team that helps private, public, and non-profit entities develop and maintain effective, practical, and lawful approaches to accomplish their inclusion and diversity objectives.