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CLIENT ALERT: PRELIMINARY INJUNCTION ISSUED BLOCKING KEY PROVISIONS OF THE DEI EXECUTIVE ORDER

On January 21, 2025 (the “Effective Date”), President Trump issued an executive order (no. 14173) entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (the “Executive Order”). This Executive Order significantly changes federal contractors’ compliance requirements and obligations under federal law, although it contains a 90-day grace period. Our firm released a client alert (the “Client Alert”) detailing the scope and impact of the Executive Order.

On February 21, 2025, a federal district court in Maryland issued a preliminary injunction (the “Injunction”) that, among other things, blocked two key provisions of the Executive Order: the provision requiring certifications by federal contractors and grant recipients pursuant to  31 U.S.C. § 3729, the False Claims Act (the “Certification Provision”), and the provision seeking to end private sector DEI preferences and identifying private sector compliance investigations (the “Enforcement Provision”). The Trump Administration (the “Administration”) tried to block the Injunction – both through an appeal and through a stay. It was unable to obtain a stay, and the appeal is pending.

On March 10, 2025, the Court issued an order clarifying the Injunction, preventing the Administration or any agency from requiring any certification under the Certification Provision or bringing any enforcement of the Executive Order under the False Claims Act or the Enforcement Provision. In short, the Executive Order has been put “on hold” until the Administration’s appeal is ruled on.

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What Does this Mean for You?

Although the Executive Order’s two key provisions are currently blocked, federal contractors and grant recipients should still consider reviewing their DEI programs and adjusting them if any might violate the new regulatory scheme as presented in the Client Alert.

Gesmer Updegrove will continue monitoring developments in this area, including those related to the appeal and the Injunction. In the meantime, if you have any questions about the foregoing matters or the Executive Order generally, please contact Ibrahim Salah and Zane Fernandez.

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