On March 14, 2025, the Fourth Court of Appeals lifted the nationwide preliminary injunction issued on February 20, 2025 by a federal judge in Baltimore that temporarily halted the implementation of two of President Trump's Executive Orders related to diversity, equity, and inclusion (DEI)—Wasteful Government DEI Programs and Preferencing (EO 14151) and Ending Illegal Discrimination and Restoring Merit-Based Opportunity (EO 14173) (the “DEI Executive Orders”). The injunction enjoined activities related to three provisions of the Executive Orders— the “Termination Provision,” the “Certification Provision,” and the “Enforcement Threat Provision.”

With the injunction lifted, it is essential to understand what these provisions require because they are now in effect.

• The “Termination Provision” requires federal agencies to end certain grants within 60 days of the Executive Order, including all equity-related grants or contracts.
   
• The “Certification Provision” requires contract or grant awards to include statements regarding DEI programs that say the contractual counterparty or grant recipient agrees to comply in all respects with all applicable Federal anti-discrimination laws and that such compliance is material to the government’s payment decisions and certify it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.
  (NOTE: Keeping pace with the evolving landscape, on Tuesday, April 15, 2025, the U.S. District Court for the Northern District of Illinois issued a preliminary injunction preventing the U.S. Department of Labor from enforcing the certification provision. While this restriction applies solely to the Department of Labor, it extends to all grantees and government contractors.)
   
• The “Enforcement Threat Provision,” requires federal agencies 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. In addition, the provision also requires the Attorney General, within 120 days of the Executive Order, to submit a report with recommendations for enforcing civil rights law (an action that was not enjoined by the earlier ruling) and encouraging the private sector to end DEI. 

EEOC Guidance

Shortly after the Fourth Circuit granted the government’s request to stay the preliminary injunction pending appeal, on March 19, 2025, the EEOC and the Justice Department issued guidance documents to provide clarity on what constitutes illegal DEI.  While the EEOC guidance recognized that DEI is a “broad term that is not defined in Title VII[,] . . . “DEI initiatives, policies, programs, or practices may be unlawful if they involve an employer or other covered entity taking an employment action motivated—in whole or in part—by an employee’s or applicant’s race, sex, or another protected characteristic.” In light of the EEOC’s guidance, employers focused on DEI initiatives may be subject to compliance challenges.

Ongoing Litigation

Despite the halt of the nationwide injunction by the Fourth Circuit, on March 27, 2025 a judge in the United States District Court for the Northern District of Illinois issued a 28-day temporary restraining order prohibiting the Department of Labor from enforcing provisions of the DEI Executive Orders against an Illinois nonprofit. While this order is limited in part to the Department of Labor and in part to the specific nonprofit, it demonstrates the flurry of litigation that we expect regarding the DEI Executive Orders.

Next Steps for Employers

In light of the EEOC guidance and the lifting of the nationwide injunction, employers focused on DEI initiatives may be subject to increased scrutiny. Companies should be aware, however, that the legal landscape surrounding diversity and inclusion is continuously and quickly evolving.

The authors of this article and other Nelson Mullins employment attorneys are monitoring developments in this area to provide advice about whether diversity initiatives, policies, or procedures may be out of compliance with federal law and/or public policy.