As discussed here, on February 21, 2025, a federal judge in the District of Maryland granted a preliminary injunction blocking enforcement of various provisions of Executive Order 14173 (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity) (the EO). On March 14, 2025, the Fourth Circuit Court of Appeals issued a stay of the preliminary injunction.  

The stay means that enforcement of the EO may continue, which will require federal contractors and federal grant recipients to certify that they do not “operate any programs promoting DEI that violate any applicable federal anti-discrimination laws.” The stay also allows the U.S. government to bring False Claims Act enforcement actions against federal contractors and grant recipients that allegedly make a false certification. 

Additionally, the stay allows federal agencies to once again act to terminate all “equity-related” grants or contracts, with the caveat that grants, “based on a grantee’s speech or activities outside the scope of the funded activities” may not be terminated.  

The Court emphasized that the “certification” and “enforcement threat” provisions of the EO apply “only to conduct that violates existing federal anti-discrimination law.” With a further caution that, “[w]hat the Orders say on their face and how they are enforced are two different things” and that agency enforcement actions that go beyond the Orders’ narrow scope may well raise serious First Amendment and Due Process concerns….”  

Ongoing legal battles surrounding this and other recently issued EO’s, highlight the complexities and challenges faced by federal contractors and grant recipients in navigating DEI programs. And, while the stay issued by the Court allows enforcement of the EO to continue, it also underscores the importance for all employers to adhere to existing federal anti-discrimination laws.