DEI – Grant Recipients and Contractor Update
We have continued to track the rapidly evolving circumstances surrounding the Trump Administration’s Executive Orders targeting diversity, equity, and inclusion (“DEI”) programs. Recent developments include a reported retroactive review of affirmative action plan submissions by federal contractors, and the issuance of a nationwide temporary restraining order that blocks the U.S. Department of Labor from enforcing a certification requirement against grant recipients and federal contractors.
Renewed Focus on Federal Contractors
The Trump Administration’s scrutiny of federal contractors’ DEI practices is intensifying. Executive Order 11246, which was recently revoked by the Trump Administration, prohibited discrimination in employment by federal contractors and implemented affirmative action obligations. Under Executive Order 11246, federal contractors and subcontractors were required to create plans and set goals to address the differences between the demographics of the available workforce and their staff. The affirmative action obligations were to be implemented without the use of hiring preferences or quotas prohibited by anti-discrimination laws, and contractors had to submit their plans to the OFCCP. The Trump Administration Executive Order that revoked Executive Order 11246 required, among other things, the Office of Federal Contract Compliance Programs (“OFCCP”) to cease actions that encourage, and to hold federal contractors accountable for, “affirmative action” and “workforce balancing” initiatives.
According to the Wall Street Journal, the recently appointed head of the OFCCP, Catherine Eschbach, announced internally that the OFCCP will now review the previously mandated affirmative action plans submitted by contractors before this Trump Administration took office in January 2025. The review is to look at potential discriminatory employment practices that warrant investigation or penalties.
While the OFCCP’s examination of affirmative action plans is backward looking, federal contractors may benefit from a review of their policies and procedures given the focus on contractors by the government. Federal contractors should work with counsel to conduct a privileged assessment of their recruitment strategies, mentorship programs, hiring and compensation policies, and other initiatives previously created to comply with Executive Order 11246, to ensure that the practices do not unintentionally limit opportunities for any group.
DEI Programs of Grant Recipients and Federal Contractors
Just two weeks after a federal appeals court lifted a nationwide injunction against two of the Trump Administration’s Executive Orders (“EOs”) targeting DEI initiatives, a federal judge in Illinois temporarily blocked the certification requirement in one of the EOs aimed at recipients of “equity-related” grants and federal contractors. The March 27, 2025 temporary restraining order (“TRO”), which applies nationwide, prevents only the U.S. Department of Labor from requiring grant recipients or contractors to certify that they do not “operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws” (“Certification Provision”). The TRO, however, does not extend to other federal agencies or prevent enforcement of other provisions in the EOs. While the U.S. Department of Labor is temporarily restrained from enforcing the Certification Provision on a nationwide basis, other federal agencies may continue to enforce it.
The opinion issued with the TRO, out of the U.S. District Court for the Northern District of Illinois, reflects repeated legal challenges that the EOs targeting DEI initiatives are unconstitutionally vague because the government has failed, in the EOs and in legal arguments, to offer a definition or other clarity regarding what constitutes “illegal” DEI programs. According to the opinion, this, in turn, implicates due process rights and First Amendment protections because it chills protected speech and creates undue pressure on recipients and contractors with the specter of lost funding and potential liability under the False Claims Act.
We will continue to track developments in this case and any other legal challenges to the DEI-related EOs. The guidance, TROs, and injunctions are changing quickly and will continue to shift as litigation proceeds. Grant recipients and contractors who have questions about their employment practices in relation to the EOs, especially those contacted by any agency to certify compliance, should consult counsel to discuss.
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