On Friday, February 21, 2025, a federal judge in Baltimore issued a nationwide preliminary injunction (Order) enjoining certain parts of President Trump’s January 20, 2025 Executive Order 14151, Ending Radical and Wasteful Government DEI Programs and Preferencing, (EO 14151) and his January 21, 2025 Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (EO 14173). The injunction issued in National Association of Diversity Officers in Higher Education et al. v. Trump et al., Case No. 1:25-cv-00333 (U.S. D. Ct. Md.) (Baltimore) pauses, for now, the enforcement of certain aspects of EO 14151 and 14173. The Order does not, however, stop the U.S. Attorney General from investigating and producing a report, by May 21, 2025, outlining possible violations by private employers outside of the education industry and federal contractors of EO 14151 and/or EO 14173. Employers should be aware that the Order has a direct impact on many government contractors and the agencies with whom they are contracting.
What is the Baltimore case about?
On February 3, 2025, the city of Baltimore and several groups of academics and restaurant workers1 filed a complaint for declaratory and injunctive relief against President Trump and several federal agencies and their heads2 challenging EO 14151 and EO 14173. The plaintiffs argue that the executive orders are so vague that it is unclear which diversity, equity, and inclusion (DEI) programs would be considered illegal, in violation of Fifth Amendment Due Process and the Free Speech Clause of the First Amendment.
In the lawsuit, the plaintiffs challenge specific directives as unconstitutionally vague. EO 14151 ordered all federal agencies to terminate all “equity-related” grants or contracts within 60 days and eliminate all references to DEI from the federal government. The plaintiffs claim that federal agencies will have to make “arbitrary decisions” about whether grants are “equity related,” leaving the plaintiffs in limbo as they wait to see if they will receive their funding. The plaintiffs also challenge a provision in EO 14173 that requires all federal contractors and grantees to certify that they do not operate “any programs promoting DEI” to receive federal funds. The plaintiffs claim that this demand violates their right to free speech.
The plaintiffs allege that since President Trump issued EO 14151 and EO 14173, “agency Defendants have begun to freeze, or even terminate, grants and contracts,” as such “individuals and institutions are forced to censor themselves for fear of losing federal funding or being targeted by imminent federal investigations.”3 The plaintiffs argue that President Trump has overstepped his presidential powers and “his unconstitutional acts are sowing fear, chilling speech, and limiting the exercise of academic freedom.” It bears noting that similar arguments are being made in other cases involving other executive orders such as the freeze on grant and contract proceeds.
Relevant to private-sector employers, the plaintiffs argue that because EO 14151 and EO 14173 do not define “illegal DEI” or “illegal discrimination or preferences,” this violates the plaintiffs’ Due Process rights because the policy is susceptible to arbitrary enforcement.
What did the federal district court decide?
Following a hearing on Wednesday, February 19, 2025, the federal district court largely agreed with the plaintiffs and found portions of EO 14151 and EO 14173 were likely unconstitutionally vague and likely violate free speech rights. However, the court did not block the attorney general from preparing reports or pursuing investigations based on the directives in those executive orders.
In the Order, the court noted that the lack of specificity in EO 14151 ad EO 14173 leave the private sector at a loss for what the Trump administration will deem to be illegal. As such, the court found that the uncertainty surrounding DEI programs and policies likely violates the plaintiffs’ constitutional rights and chills protected speech.
What does this mean for employers and government contractors?
For now, the federal district court has issued a nationwide injunction against enforcement of certain aspects of EO 14151 and EO 14173. This means that it is unlikely that any government action can currently proceed against private-sector employers and federal contractors or grantees for violating those executive orders and maintaining existing or instituting new DEI-related programs, policies, and procedures. The injunction will also prevent the enforcement of the certification requirement under EO 14173 requiring all federal contractors and grantees to certify that they do not operate DEI programs.
Notably for federal contractors, the Order does not address the revocation of Executive Order 11246, which remains revoked. As such, affirmative action plans for women and minorities are no longer mandated for federal contractors, and as discussed in a prior Alert, decisions based on an existing affirmative action plan may create a significant risk of potential liability, as this is not specifically addressed by the Injunction Order.
Private-sector employers and federal contractors and grantees should take this time to assess their DEI policies and identify any future vulnerabilities within these policies. It is clear that the Trump administration intends to continue to pursue action against what it deems to be “illegal” DEI. While EO 14151 and EO 14173 are temporarily enjoined, we expect the administration to challenge the Order and pursue other avenues of attack against what it deems to be “illegal” DEI policies.