The preliminary injunction provides some temporary relief to federal contractors and other private sector employers as to the challenged provisions. However, an appeal is inevitable so the district court decision should not be taken as the final word.

In Nat’l Assoc. of Diversity Officers in Higher Ed. v. Trump, D. Md, the United States District Court for the District of Maryland issued a preliminary injunction that blocks, at least for now, some of the more salient provisions of President Donald Trump’s executive order on diversity, equity and inclusion (DEI) that affects federal contractors and other private sector employers. Even so, for the reasons discussed below, employers are well advised to continue to evaluate their DEI policies, programs, practices and communications to assess the potential risk that they may include unlawful preferences and exclusions and to take corrective action as may be appropriate.

The plaintiffs challenged provisions in two (2) executive orders:

1. Executive Order No. 14151, “Ending Radical and Wasteful Government DEI Programs and Preferencing”; and
2. Executive Order No. 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity”

This Alert specifically addresses Executive Order No. 14173, since it applies to federal contractors and other private sector employers and not Executive Order No. 14151, which only applies directly to executive agencies.

With regard to Executive Order No. 14173, the plaintiffs challenged two provisions:

1. Certification Provision

Section 3(b)(iv) requires the head of each government agency to include in every contract or grant a term requiring the contractor or grantee to certify its compliance with federal anti-discrimination laws (i.e., no illegal DEI). Moreover, such certification is a material term to the government’s payment under the contract or grant for purposes of claims under the False Claim Act where penalties for violations include, but are not limited to, treble damages.

The plaintiffs challenged the Certification Provision as violating the First Amendment. The plaintiffs also alleged that the Certification Provision violates separation of powers principles.

2. Enforcement Threat Provision

Section 4(b)(iii) provides: 

To further inform and advise me [the President] so that my Administration may formulate appropriate and effective civil-rights policy, the Attorney General, within 120 days of this order, in consultation with the heads of relevant agencies and in coordination with the Director of OMB, shall submit a report to the Assistant to the President for Domestic Policy 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 report shall contain a proposed strategic enforcement plan identifying:

(iii) 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, each agency shall 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. [Italics added]

The plaintiffs challenged the Enforcement Threat Provision as violating the First Amendment as well as the Fifth Amendment due to its vagueness.

In granting its preliminary injunction on the Certification Provision, the court ruled that the plaintiffs are likely to succeed on the merits of their claim that the Certification Provision violates the First Amendment. With this finding, the court noted in a footnote that it need not decide whether the plaintiffs have shown likelihood of success on the merits on their separation of powers claim.

In granting its preliminary injunction on the Enforcement Threat Provision, the court ruled the plaintiffs are likely to succeed on the merits of their claim that the Enforcement Threat Provision violates not only the First Amendment but also the Fifth Amendment. However, in a footnote, the court stated that its preliminary injunction does not enjoin the portion of the executive order by which the president directs the attorney general to identify a “plan of specific steps and measures to deter DEI programs or principles…that constitute illegal discrimination or preferences.” See the language above in italics. [1]

The preliminary injunction provides some temporary relief to federal contractors and other private sector employers as to the challenged provisions. However, an appeal is inevitable so the district court decision should not be taken as the final word.     

Further, the preliminary injunction does not enjoin—and will not deter—the EEOC, state attorneys general, activists and private plaintiffs from investigating or challenging DEI programs that they believe include unlawful preferences, exclusions, etc. For example only, the Acting Chair of the EEOC Andrea Lucas has stated in terms of Title VII: “my priorities will include rooting out unlawful DEI-motivated race and sex discrimination.”[2]

Consequently, employers are well advised to continue to evaluate their DEI policies, programs, practices and communications to assess the potential risk that they may include unlawful preferences, exclusions, etc. and to take corrective action as may be appropriate. In so doing, employers should consider the benefit of conducting such analysis under the attorney-client privilege as we recommended in our prior Alert shortly after the executive order was signed in January.

For More Information

If you have any questions about this Alert, please contact Jonathan A. Segal, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Notes

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.