Federal courts continue to navigate the Diversity, Equity, and Inclusion (“DEI”) landscape including Executive Orders targeting DEI. In a recent development last week, U.S. District Judge Matthew Kennelly granted a preliminary injunction against the United States Department of Labor (“DOL”) from enforcing the Executive Order titled “Ending Radical and Wasteful Government DEI Programs and Preferencing” issued by President Trump on January 20, 2025 that effectively bans DEI programs for federal contractors and grantees.
The ruling in Chicago Women in Trades v. Trump (N.D. Ill., No. 1:25-cv-2005) extends a prior temporary restraining order, concluding that requiring contractors to certify non-participation in DEI programs likely violates their First Amendment rights. There, Chicago Women in Trades, a nonprofit that provides job training to women, challenged the requirement for contractors to certify that they do not operate DEI programs.
The court stated, “Although the government emphasized, both in its briefing and at oral argument, that the certification provision implicates only illegal DEI programs, it has studiously declined to shed any light on what this means. The answer is anything but obvious.” The court found requiring such certification likely violates the non-profit’s free-speech rights under the Constitution. The court declined to extend the ruling nationwide but prevented the DOL from cutting off funding to the non-profit. The Trump administration has said that nationwide orders from judges improperly limit the President's powers.
The court’s ruling is not occurring in a vacuum. It lands amid a broader national reconfiguration of what is considered “legal” DEI. On April 11, 2025, four major law firms—Kirkland & Ellis, Latham & Watkins, Simpson Thacher, and A&O Sherman Sterling—entered into agreements with the Trump administration and each pledged at least $100 million in pro bono legal work to causes supported by the Administration. At the same time, industry voices like legal recruiters are making quiet adjustments. Major legal recruiting firm Major, Lindsey & Africa, for instance, silently removed DEI-related content from its website.
This trend has created a background in which courts are increasingly distinguishing between permissible DEI practices and those that may be construed as illegal preferences or quotas based on protected characteristics. According to recent EEOC guidance, Title VII does not prohibit all DEI practices but does prohibit any employment action that uses race, sex, or other protected traits as a motivating or differentiating factor.
A Reminder: Federal Shifts Don’t Cancel State Law Obligations
For California employers, especially those with federal contracts, the ruling provides temporary breathing room, but not immunity from legal scrutiny. Even if enforcement of the federal executive orders is paused, the practical takeaway remains: employers must walk a tightrope between compliance with potentially conflicting directives.
California’s robust anti-discrimination framework, including the Fair Employment and Housing Act (“FEHA”), continues to support many initiatives that fall under the DEI umbrella. While federal action may be rolling back DEI-related mandates, California law still requires efforts to prevent discrimination, promote workplace equity, and provide reasonable accommodations. Employers here must remain careful not to conflate legal EEO (Equal Employment Opportunity) practices with potentially problematic DEI branding, especially in federal compliance contexts.
Key Takeaways for California Employers
Whether you are a federal contractor, a law firm navigating client and other optics, or a tech company adapting internal policies, here are five practical steps to take now:
1. Audit Your DEI Programs
Ensure they are grounded in lawful EEO principles. Avoid policies or practices that suggest goals, quotas or preferences based on race, sex, or other protected traits. Make sure your audit is done in a manner that ensures that it is privileged from discovery.
2. Separate DEI from EEO and Accessibility Functions
As seen in the EEOC settlements, decoupling legal compliance efforts from broader DEI goals is becoming a best practice.
3. Train Management Teams
Educate supervisors, recruiters, and hiring managers about the distinction between inclusive outreach and prohibited disparate treatment.
4. Document Compliance Thoughtfully
Review your employee handbooks, job postings, grant applications, and training materials. Use language that emphasizes compliance and fairness over ideological aims.
5. Monitor State and Federal Trends
This is a fast-moving legal area. With pending appeals and possible Supreme Court involvement, employers must remain agile and well-informed.
