Federal Court Temporarily Blocks DEI Certification Requirement for Federal Contractors and Grantees

This article is from the National Law Review: https://lnkd.in/e8mZTzCz In another legal development with significant implications for federal contractors, grantees, and nonprofits, a federal district court has temporarily blocked the U.S. Department of Labor (DOL) from enforcing certain DEI-related certification and termination requirements found in two recent executive orders issued by President Trump.

On March 27, 2025, Judge Matthew Kennelly of the U.S. District Court for the Northern District of Illinois issued a temporary restraining order (TRO) preventing the DOL from requiring Chicago Women in Trades (CWIT) to certify that it does not operate any diversity, equity, and inclusion (DEI) programs that violate federal anti-discrimination laws. The court also restricted the DOL from terminating CWIT’s funding based on those executive orders.

The Executive Orders at Issue

The TRO targets two of President Trump’s executive orders:

• Executive Order 14173: Ending Illegal Discrimination and Restoring Merit-Based Opportunity

• Executive Order 14151: Ending Radical and Wasteful Government DEI Programs and Preferencing

These EOs repealed various Biden-era DEI mandates, including EO 13985, which had required federal agencies to implement Equity Action Plans. EO 14173 is especially controversial for introducing a certification requirement that federal contractors and grantees must confirm they do not operate any DEI initiatives that violate “applicable Federal anti-discrimination laws.”

Court’s Reasoning

Judge Kennelly granted CWIT’s request for temporary relief, citing the First Amendment and the vagueness of the certification language. The court found:

• The term “illegal DEI” is undefined, making the certification ambiguous and constitutionally suspect.

• CWIT was likely to succeed on the merits of its First Amendment claim.

• The government’s threat to enforce the certification through the False Claims Act could result in serious legal and financial consequences, justifying urgent relief.

The court also blocked the DOL from terminating CWIT’s funding under EO 14151, concluding that doing so would cause irreparable harm.

Broader Impact: TRO Extends Beyond CWIT

While the court’s ruling on the termination provision under EO 14151 applies only to CWIT, the TRO related to EO 14173’s certification requirement applies across the board to all DOL-administered grants and contracts. As of now, the DOL is barred from requiring any contractor or grantee to certify compliance with EO 14173’s DEI-related provisions.

However, the TRO is temporary, lasting 28 days, with a hearing scheduled for April 10, 2025, to determine whether it should be extended or replaced by a preliminary injunction.

What Should Contractors and Grantees Do Now?

For organizations that contract with or receive grants from the federal government, particularly those working with the Department of Labor, this case is a critical reminder to:

🔍 Monitor Legal Developments

• The status of EOs 14151 and 14173 is actively evolving through the courts.

• Additional rulings may either expand or narrow the applicability of these executive orders.

📄 Review DEI-Related Certifications

• If your organization has received a self-certification form related to DEI from a federal agency, consult legal counsel before submitting it.

🧩 Assess Risk Exposure

• Conduct an internal audit of DEI programs, ensuring alignment with federal anti-discrimination laws.

• Be prepared to demonstrate that any DEI initiatives are voluntary, compliant, and non-discriminatory.

🧠 Update Training Programs

• Review and revise internal training on the False Claims Act and on how DEI programs intersect with federal contract compliance.

• Ensure leaders, grant managers, and compliance teams understand their responsibilities.

  
  

Final Thoughts

The TRO issued by Judge Kennelly is a significant check on the federal government’s recent attempts to impose sweeping restrictions on DEI initiatives through the contracting process. While the immediate relief applies to the DOL, and the broader legal challenges to Executive Orders 14151 and 14173 continue, federal contractors and grantees must remain vigilant.

As the legal landscape evolves, careful documentation, legal review, and transparent compliance efforts will be key to maintaining funding and protecting your organization from risk.