DEI Litigation Whiplash: Appellate Court Allows the Government to Move Forward with Challenged DEI-Related Executive Orders
Uncertainty for companies when making business decisions is a new norm. Tariffs aren’t going to be the only thing that is on again and off again. The same is happening with directives governing diversity, equity, and inclusion (“DEI”) initiatives. In the first two days of President Trump’s second term, he signed two DEI-related executive orders (“EOs”), EO 14151 (Ending Radical And Wasteful Government DEI Programs And Preferencing) and EO 14173 (Ending Illegal Discrimination And Restoring Merit-Based Opportunity). While they were in effect, these EOs caused widespread concern throughout the public and private sector as entities scrambled to understand the implications for their businesses. Approximately a month later, a federal judge in Maryland issued a preliminary injunction that stopped the government from implementing key provisions of the two EOs. However, the tide turned on Friday, March 14, 2025, when a three-judge panel from the U.S. Court of Appeals for the Fourth Circuit granted the government’s motion to stay the injunction pending appeal. This ruling empowers the government to resume the implementation of EO 14151 and EO 14173.
While the preliminary injunction was in effect, the government was precluded from (1) terminating “equity-related” contracts and grants pursuant to EO 14151, (2) requiring that government contractors and grantees sign a DEI certification pursuant to EO 14173, and (3) bringing any False Claims Act (“FCA”) or other enforcement action premised on the DEI certification. (As we have previously explained, the certification requirement in EO 14173 is intended to deter contractor and grantee DEI-programs by invoking the specter of FCA liability.)
Now that the injunction is stayed, an emboldened government will likely move swiftly to terminate contracts and grants that it views as being “equity-related” and to require contractors and grantees to execute the DEI certification. We have previously recommended general steps that contractors and grantees can take as they navigate a rapidly changing environment in which the president signs new EOs almost daily. Below, we offer recommendations specific to the government’s renewed ability to implement the previously enjoined provisions of the DEI-related EOs.
Recommendations for Federal Contractors and Grantees
If not already completed, it is critical to undertake a privileged assessment of your company’s DEI program, including any public-facing content and recently revised program elements that have not yet been reviewed with counsel.
Confer with counsel immediately in the event of an actual or threatened termination. Although the stayed preliminary injunction allows the government to terminate “equity-related” contracts as directed by EO 14151, it remains the case that the government may not terminate contracts in bad faith. In this regard, terminating contracts based on contractor or grantee speech outside of the government-funded scope of work could be subject to legal challenge. (It is also important to avoid signing any documents containing waiver or release language that might preclude recovery of costs in the future.)
Develop a plan for responding to the DEI certification. This includes ensuring that no one in your organization signs the certification without the prior knowledge and approval of relevant company leadership. We have previously recommended potential contractor and grantee responses to the DEI certification.
Understand the legal landscape. First, there are several other lawsuits pending that challenge EO 14151 and EO 14173, and these could bring new preliminary injunctions. These cases include Shapiro et al. v. U.S. Department of the Interior et al., E.D. Pa., Case No. 25-cv-763; National Urban League et al. v. Trump et al., D.D.C., Case No. 25-cv-00471; San Francisco AIDS Foundation et al. v. Trump et al., D.D.C., Case No. 25-cv-1824; and Chicago Women in Trades v. Trump et al., N.D. Ill., Case No. 25-cv-02005. Additionally, two of the three appellate judges who ruled that the government may implement the DEI-related EOs said they consider the EOs to be “of limited scope” because the EOs “do not purport to establish the illegality of all efforts to advance diversity, equity, or inclusion, and they should not be so understood.” Notably, these judges also distanced themselves from the president’s apparent view of DEI, stating that “while history may be static, its effects remain” and that “people of good faith who work to promote diversity, equity, and inclusion deserve praise, not opprobrium.” This signals that having a DEI program is not per se illegal.
Continue to comply with applicable contract and grant requirements arising under state and local government contracts, seeking the advice of counsel for any perceived conflicts between these requirements and the DEI-related EOs.
Fourth Circuit Temporarily Allows DEI-Related EOs to Continue
As we previously reported, on March 3, 2025, the Maryland District Court denied Defendants’ motion to stay the preliminary injunction in National Association of Diversity Officers in Higher Education v. Trump, preventing the federal government from enforcing several DEI-related clauses in its recent Executive Orders. The court held that the Government had not shown a likelihood of success on the merits and that both the balance of harms and the public interest weighed against the stay. In addition, the court declined to limit the scope of the injunction to actions involving only Plaintiffs and their members, holding that the severity of the constitutional violations at issue justified the nationwide scope of the injunction.
However, on March 14, 2025, the Court of Appeals for the Fourth Circuit stayed the preliminary injunction pending the outcome of the Government’s appeal, which will allow implementation of the DEI-related Executive Orders to continue until the court makes a final ruling on the injunction. The circuit court found that the Government had shown a strong likelihood of success on the merits under Nken v. Holder, 556 U.S. 418, 426 (2009). In concurring opinions, Judges Diaz and Harris expressed concerns over the lack of definition given to “DEI or its component terms” and the potential for overbroad agency enforcement of the Executive Orders. Judge Rushing, in a separate concurrence, raised “serious questions” about the ripeness of Plaintiffs’ complaint, as the district court relied on evidence of how agencies “are implementing or may implement” the Executive Orders to grant the preliminary injunction.
DEI Injunction Terminated by Federal Court of Appeals Reinstating DEI Certification Requirement and Civil False Claims Act Risk
As previously reported, one of the first executive orders (EO 14173) issued by President Trump was to rescind Executive Order 11246 issued by President Lyndon B. Johnson, which required federal contractors and subcontractors to engage in affirmative action with respect to women and minorities. In EO 14173, President Trump also directed those federal agencies contracting with all entities to cause the end of all “illegal” DEI and DEIA programs, by — among other things — requiring federal contractors and subcontractors to “certify” that they do “not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.” As also reported, this “certification” requirement gives rise to potentially significant exposure for contractors under the civil False Claims Act if a contractor was later found to have “falsely” submitted its certification — i.e., that it was maintaining an “illegal” DEI or DEIA program.
Not long after issuance of EO 14173, litigation was initiated, challenging the executive order as unconstitutionally vague and a violation of the First Amendment, among other arguments: The DEI-related provisions, including the certification requirement, based on the failure of the executive order to define or provide any guidance as to what would be considered an “illegal” DEI or DEIA program. In essence, the plaintiffs asserted that, without some defining guidance, the executive order was overly broad and could lead to significant exposure for contractors. As we reported, the federal district court agreed and entered a nationwide injunction prohibiting enforcement of the DEI-related provisions with limited exception. Almost immediately thereafter, the Trump administration appealed the entry of the injunction to the Fourth Circuit Court of Appeals.
On March 14, 2025, the Federal Appellate Court stayed the nationwide injunction, finding that the injunction was overly broad and that the executive order itself is likely not unconstitutional as it merely directs agency action. The Appeals Court opined that we must wait to see how the various agencies implement the directives within the executive order, and whether such implementation is done in a constitutional manner. As a result of the most recent court decision, the DEI certification requirement for government contractors and the civil False Claims Act risk is “back in play.”
However, this is likely not the end of the story, as the manner of implementation and enforcement by the various federal agencies is sure to generate questions and challenges. The terminology of the required certifications and the initiation of civil False Claims Act cases on the basis of alleged “illegal” DEI or DEIA programs will lead to legal challenges and a developing body of caselaw.
Gender-Affirming Care Protections Eroded by Recent HHS Guidance and White House Executive Orders
On February 20, 2025, the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) announced the recission of “HHS Notice and Guidance on Gender Affirming Care, Civil Rights, and Patient Privacy” (the “Rescinded 2022 Guidance”) pursuant to recent Executive Order (“EO”) 14187 (“Protecting Children from Chemical and Surgical Mutilation”) and EO 14168 (“Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government”), issued under the current Trump administration.
These executive orders directed HHS to revoke policies promoting gender-affirming care and reconsider its interpretation of civil rights protections and health information privacy laws as they relate to such care.
Background on the Rescinded 2022 Guidance
The Rescinded 2022 Guidance, originally issued on March 2, 2022 under the Biden administration, and which we previously discussed here, established a framework for applying federal civil rights protections and patient privacy laws to gender-affirming care in three key ways:
Section 1557 of the Affordable Care Act (ACA): The Rescinded 2022 Guidance asserted that federally funded entities restricting access to gender-affirming care could be in violation of Section 1557, which prohibits discrimination based on sex, including gender identity.
Section 504 of the Rehabilitation Act and the Americans with Disabilities Act (ADA): The Rescinded 2022 Guidance took the position that gender dysphoria could qualify as a disability, meaning that restricting access to care based on gender dysphoria could constitute unlawful discrimination.
Health Insurance Portability and Accountability Act of 1996 (HIPAA): The Rescinded 2022 Guidance interpreted HIPAA’s Privacy Rule to prohibit the disclosure of protected health information (PHI) related to gender-affirming care without the patient’s authorization, except in limited circumstances when explicitly required by law.
HHS Bases for the Rescission
OCR Acting Director, Anthony Archeval, stated that the “recission is a significant step to align civil rights and health information privacy enforcement with a core Administrative policy that recognizes that there are only two sexes: male and female.” The HHS Office on Women’s Health also issued guidance expanding on the sex-based definitions set forth in the EO 14168. This HHS guidance contained the following definitions:
Sex: A person’s immutable biological classification as either male or female.
Female: is a person of the sex characterized by a reproductive system with the biological function of producing eggs (ova). We note that EO 14168 defines female in a slightly different manner to mean “a person belonging, at conception, to the sex that produces the large reproductive cell.”
Male: is a person of the sex characterized by a reproductive system with the biological function of producing sperm. We note that EO 14168 defines female in a slightly different manner to mean “a person belonging, at conception, to the sex that produces the small reproductive cell.”
In its February 20, 2025 press release, HHS further stated that “[t]his rescission supports Administration policy in Executive Order 14187 that HHS will not promote, assist, or support “the so-called ‘transition’ of a child from one sex to another, and it will rigorously enforce all laws that prohibit or limit these destructive and life-altering procedures.”
Further, OCR’s formal recission letter dated February 20, 2025, outlining several reasons leading to the Rescinded 2022 Guidance:
ACA (Section 1557): HHS cited recent federal cases, Texas v. EEOC and Bostock v. Clayton County, as calling into question the legal basis for extending Section 1557 protections to gender identity. But see Kadel v. Folwell, 2024 WL 1846802 (4th Cir. 2024) (On May 8, 2024, the Fourth Circuit affirmed the trial court rulings that the exclusion of coverage for gender affirming care by state health plans in West Virginia and North Carolina violated the nondiscrimination protections of the Affordable Care Act (ACA) Section 1557).
Rehabilitation Act and ADA: HHS argued that gender dysphoria does not meet the statutory definition of a disability, as the law explicitly excludes gender identity-related conditions unless resulting from a physical impairment. However, the Fourth Circuit, in Williams v. Kincaid, 45 F. 4th 759, 770 (4th Cir. 2022), concluded that gender dysphoria is a disability protected under the ADA and does not fall within the ADA’s exclusion for “gender identity disorders not resulting from physical impairments.” See also Blatt v. Cabela’s Retail, Inc., 2017 WL 2178123 (E.D. Pa. May. 18, 2017) (Plaintiff’s gender dysphoria, which substantially limits her major life activities of interacting with others, reproducing, and social and occupational functioning, is not excluded from ADA protection.)
HIPAA: HHS stated that the Rescinded 2022 Guidance lacked a legal foundation for restricting PHI disclosures beyond HIPAA’s established exceptions. However, we note that current established exceptions already allow disclosures without patient authorization in certain circumstances, including when required by law. Interestingly, the new reproductive health amendments to HIPAA, which became effective on December 23, 2024, may, if interpreted broadly, provide additional privacy protections to information related to gender affirming care.
In addition to the recission, HHS also announced its launch of HHS’ Office on Women’s Health website, which we reference above, to promote these policies.
Impact on HIPAA and Patient Privacy
In the wake of the Rescinded 2022 Guidance and associated OCR statements, it remains unclear how OCR will now handle complaints related to the use and disclosure of PHI concerning gender-affirming care. Accordingly, entities that handle such data should carefully review their internal policies to ensure compliance with evolving interpretations of HIPAA’s Privacy Rule.
However, entities should also consider the HIPAA Privacy Rule to Support Reproductive Health Care Privacy, finalized in April 2024, which broadly defines “reproductive health care.” Gender-affirming care often falls within this definition, meaning that certain privacy protections may still apply under this rule despite the Rescinded 2022 Guidance. While HHS’s recent actions suggest a lack of intent to defend this interpretation, the 2024 reproductive health rule remains in effect despite ongoing litigation in Texas challenging these amendments. On September 8, 2024, the Texas Attorney General, in litigation pending in the Northern District of Texas, claimed that the new rule harms the AG’s ability to investigate medical care, lacks statutory authority, and is arbitrary and capricious. This litigation is still pending.
Compliance and Legal Considerations
Federal vs. State Law Conflicts: Entities must navigate the potential conflicts between state laws and the rescission of the Rescinded 2022 Guidance. For instance, Colorado and California have laws explicitly protecting access to gender-affirming care, which could create legal complexities for providers and insurers operating under multiple jurisdictions.
Litigation and Injunctions: On March 4, 2025, a federal judge in Maryland issued a preliminary injunction enjoining federal agencies from issuing regulations or guidance or otherwise implementing mandates of EO 14187. This injunction applies nationwide. In a more limited fashion, a judge in Washington issued a preliminary injunction which applies only to Washington, Colorado, Minnesota, and Oregon. As the Maryland court is still deciding on the merits of the case before it, entities should monitor these legal developments to understand go forward compliance obligations under both federal and state regulations.
Potential Whistleblower Protections. EO 14187 also directs HHS, in consultation with the Attorney General, to “issue new guidance protecting whistleblowers who take action related to ensuring compliance with this order.” Accordingly, it is possible that under such contemplated guidance, an increase in whistleblower-initiated compliance investigation may ensue. Yet, such increase in whistleblowing as an avenue to evaluate compliance would not address the potential friction between the requirements under the HIPAA Privacy Rule to Support Reproductive Health Care Privacy.
Threats to Funding. On March 5, 2025, numerous health care providers enrolled in the Medicare and Medicaid programs received a letter from CMS stating that “CMS may begin taking steps in the future to align policy, including CMS-regulated provider requirements and agreements, with the highest-quality medical evidence in the treatment of the nation’s children” as it relates to gender affirming care. The following day, on March 6, 2025, SAMHSA and HRSA sent similar letters to Hospital Administrators and Grant Recipients referencing the March 5, 2025 CMS letter and threatening examination of current grants and the “re-scoping, delaying or potentially cancelling new grants in the future” depending upon the nature of the work being performed by the providers and/or grant recipients as it relates to gender affirming care for minors.
Key Takeaways
The rescission of the 2022 “HHS Notice and Guidance on Gender Affirming Care, Civil Rights, and Patient Privacy” seeks to align HHS’s policies with the Trump administration’s stance on gender-affirming care. The recission introduces financial and compliance challenges for entities regulated by the HHS. However, the recission of the Rescinded 2022 Guidance does not eliminate all HIPAA provisions related to reproductive health and other state-level protections may still provide certain privacy and anti-discrimination safeguards relative to individuals seeking gender affirming care. Given this uncertainty, organizations should revisit their policies and procedures, closely monitor the evolving regulatory landscape, and keep a close eye on litigation outcomes to ensure continued compliance.
“California Worker Freedom from Employer Intimidation” Law: What Qualifies as Intimidation?
California has recently enacted a new, controversial statute preventing employers from requiring employees to attend political or religious meetings. California Labor Code § 1137, which became effective on January 1, 2025, prohibits employers from discriminating against, retaliating against, or imposing adverse action on an employee, or threatening the same, because the employee declined to attend an employer-sponsored meeting or affirmatively declined to participate in or listen to employer communications about the employer’s opinion on religious or political matters. Additionally, if an employee refuses to attend such meeting and the meeting takes place during an employee’s scheduled shift, the employee must continue to be paid while the meeting is being held.
Key Provisions of the Law
What Meetings Qualify: Employees cannot be penalized for refusing to attend meetings that are political or religious in nature. Meetings are considered political if the meeting relates at all to political elections, political parties, legislation or regulations, or the decision to join or support a labor organization. A meeting relates to a religious matter if it discusses a religious affiliation or the decision to support or join any religious organization. The definitions for these terms are broad and could encompass a number of topics.
Exceptions to the Law: There are narrow exceptions to this law. Employers will not be viewed as violating the law who (1) are religious entities speaking on religious matters to employees who perform work in connection with the religious entity; (2) are political organizations or parties communicating to an employee; (3) are educational organizations requiring a student or instructor to attend religious or political lectures that are included in the organization’s coursework; (4) are nonprofit organizations requiring individuals to attend coursework, fieldwork, or community service relating to political or religious matters as it relates to the organization’s mission. Additionally, an employer will not be penalized for requiring employees to attend training the employer is obligated to provide under the law.
What Does This Mean for Employers?
With the implementation of this law, employers need to be careful to what meetings it requires employees to attend and the contents of those meetings. The definition for what qualifies as a political matter is broad and, importantly, includes labor discussions. While this does not limit the ability of an employer to have political or religious meetings, it does require the employer not penalize employees who choose not to attend.
Currently, business groups in California are bringing suit to prevent the enforcement of Cal. Lab. Code § 1137, claiming this statute is a violation of business’s freedom of speech rights and contradicts federal law. Because there has not been a ruling in this litigation, employers are required to continue to follow Cal. Lab. Code § 1137. An employer will be subject to a $500 civil penalty per employee for each violation. This code can be enforced by the Labor Commissioner or though an employee’s private civil action.
Conclusion
California’s new “California Worker Freedom from Employer Intimidation Law” is considered a big win for union leaders in California. Employers with operations in California need to carefully instruct supervisors on the new law to ensure compliance in California.
The Next Wave of ADA Website Accessibility Lawsuits Against Alcohol Suppliers
The increasing popularity of online shopping has made e-commerce businesses – specifically those in the alcohol beverage industry – a frequent target for costly litigation. In lockstep with the continued prevalence of website accessibility cases, plaintiff firms are sending pre-suit demand letters to alcohol suppliers and, in some cases, filing a state or federal court lawsuit. These lawsuits, which are typically filed in California, Florida, or New York, involve claims that a supplier’s website is not accessible to individuals who are blind in violation of Title III of the Americans with Disabilities Act (ADA) and related state laws. In these cases, plaintiffs seek attorneys’ fees, damages (only under state law), and injunctive relief that would require the website to conform with the Web Content Accessibility Guidelines (WCAG) standards, which have been broadly adopted by courts and regulators.
While many e-commerce companies, including alcohol suppliers, have turned to “accessibility widgets” to improve WCAG compliance, these quick-fix solutions are not always what they seem. More than 25% of all website accessibility lawsuits in 2024 (more than 1,000) were brought against businesses that used widgets, with many plaintiffs explicitly citing widget features as alleged obstacles to accessibility. Widget developers have also faced scrutiny. The Federal Trade Commission recently leveled a $1 million fine against one such company for falsely claiming that its widgets “make any website complaint.” Therefore, relying solely on widgets to comply with WCAG standards has proven ineffective and could render e-commerce businesses vulnerable to website accessibility lawsuits.
To prevail on a website accessibility claim, plaintiffs must first show that a defendant is a private entity that owns, leases, or operates a “place of public accommodation.” Courts, however, are split on what it means for a website to be considered a place of public accommodation under Title III of the ADA. While some jurisdictions require a “physical nexus” between the website and a brick-and-mortar store, other jurisdictions have permitted these cases to go forward against a website-only company that does not own or operate any physical retail location. Even so, the “physical nexus” test is applied by a majority of federal courts and was recently adopted by the most active court for ADA website litigation in the country: the US District Court for the Southern District of New York. This development will likely add to an emerging trend of website accessibility plaintiffs resorting to state courts in search of more favorable laws.
In addition to establishing that the supplier’s website is a place of public accommodation, the plaintiff must satisfy certain jurisdictional requirements that will depend on whether products can be purchased directly from the website and whether the supplier ships to the state in which the suit was filed. Leveraging these defenses (among others) will be critical when it comes to either convincing the plaintiff to withdraw the claim, filing a motion to dismiss, or achieving an early resolution on favorable terms.
Due to the rise in these website accessibility lawsuits, we encourage industry members to take a proactive approach by:
Training personnel on accessibility requirements and WCAG standards.
Testing their website against WCAG standards (through independent consultants or user testing) and retaining testing documentation to demonstrate that users with disabilities can fully use the website.
Assessing potential areas of nonconformance with WCAG standards.
Working with internal and external technical teams to implement accessibility features into the website.
Developing an accessibility policy that informs users about the company’s accessibility practices.
Considering including a link to their website accessibility policy on every webpage, including a reporting option that is appropriately routed to address accessibility issues.
Regularly auditing their website to assess its level of accessibility (particularly after website updates).
Prioritizing manual audits over “quick fixes,” like accessibility widgets.
Engaging legal counsel to minimize litigation risk associated with website accessibility issues, including whether the ADA is applicable to the company’s website in light of the current state of the law.
Appeals Court Lifts Injunction on Pair of DEI-Targeting Executive Orders: What It Means for Federal Contractors and Grantees
A panel of the United States Court of Appeals for the Fourth Circuit lifted a nationwide injunction, allowing the Trump administration to resume implementation of a pair of executive orders targeting diversity, equity, and inclusion (“DEI”) and diversity, equity, inclusion, and accessibility (“DEIA”) programs (the “Challenged Executive Orders”). On their face, the Challenged Executive Orders apply only to undefined DEI- and equity-related programs that violate existing federal anti-discrimination law, and do not purport to establish the illegality of all efforts to promote DEI. Our client alert describing those executive orders may be found here.
By way of background, as we previously wrote, on February 21, 2025, the United States District Court for the District of Maryland enjoined the Trump administration from implementing the Challenged Executive Orders.
In short, the underlying lawsuit sought to enjoin certain provisions of the Challenged Executive Orders including the provisions that: (1) directed executive agencies to terminate “equity-related” grants and contracts; and (2) directed all executive agencies to include within every federal contract or grant award a certification, enforceable through the False Claims Act, that the recipient of federal funding does not operate any programs promoting DEIA or DEI in violation of federal anti-discrimination laws (the “Challenged Provisions”). The lower court found the Challenged Provisions to be unconstitutionally vague, as well as unconstitutional content and viewpoint restrictions on speech.
On March 14, 2025, a three-judge panel of the Court of Appeals for the Fourth Circuit overturned the district court’s preliminary injunction that had enjoined key portions of the Challenged Executive Orders.
The panel all agreed that the injunction should be lifted, at least for now, while litigation over the Challenged Executive Orders’ lawfulness continues. Each member of the three-judge panel wrote a concurring opinion to explain their rationale, with two of the judges also expressing their support for principled efforts to promote diversity, equity, and inclusion. In describing why they agreed with the decision to lift the injunction, each judge noted that the underlying case does not challenge any specific agency action implementing the Challenged Executive Orders.
Accordingly, they wrote, there was not yet any basis to conclude that agencies would do so in an unconstitutional manner.
What does this mean?
Agencies may immediately begin implementing the Challenged Executive Orders. In the near term, this will likely take the form of agencies requiring grant recipients and federal contractors to certify that they do not operate any programs promoting DEIA or DEI that violate any applicable Federal anti-discrimination laws. Importantly, as previously explained, these certifications are a potential source of False Claims Act liability for those who are found to have submitted inaccurate certifications.
It is likely that agencies will seek to penalize federal grantees and contractors who, in the scope of their grant-funded or contract-related activity, engage in discrimination unlawful under current federal anti-discrimination law. Federal anti-discrimination law prohibits the use of preferences, quotas, and set asides, except in very limited circumstances.
If agencies use the Challenged Executive Orders to punish grant recipients and federal contractors for engaging in all DEI or DEIA activities, including well-crafted efforts to promote employee engagement through cultivating a sense of belonging, the Challenged Executive Orders will likely again be challenged as unconstitutional violations of the First and Fifth Amendments.
Action items for grant recipients and federal contractors:
Consider embracing a broad definition of “diversity,” to include background (socio-economic and otherwise), experiences, cultures, opinions, and the like, along with race, gender, ethnicity, and other protected characteristics.
Review their diversity, equity, inclusion, accessibility, and belonging programs to ensure they are strategic and well-designed to foster open opportunities and ensure a level playing field for all by creating an environment and culture where everyone is respected and valued.
Examine their diversity, equity, inclusion, accessibility, and belonging programs, including any training or rewards programs, to ensure they comply with current federal anti-discrimination laws. This would include a review to ensure that programs do not provide an advantage or award benefits to an individual based on a specific demographic trait.
Pay close attention to DEI or DEIA-related guidance from agencies regarding how those agencies interpret the executive orders’ DEI and DEIA prohibitions.
Merely changing some words – replacing “diversity” with “inclusivity,” or “equity” with “equality,” for example – will not make a non-compliant program compliant.
If a decision is made to modify existing diversity, equity, inclusion, accessibility, and belonging programs, consider preparing internal communications explaining the changes and their rationale.
Fourth Circuit Reopens Trump DEI-Related Executive Orders, Halts Preliminary Injunction
On March 14, 2025, the U.S. Court of Appeals for the Fourth Circuit granted the government’s request to stay a Maryland federal judge’s nationwide preliminary injunction that had blocked key portions of the president’s executive orders (EO) related to diversity, equity, and inclusion (DEI), meaning the provisions are again enforceable as the appellate court mulls the lawfulness of the EOs.
Quick Hits
A panel for the Fourth Circuit granted the government’s request to stay a nationwide preliminary injunction that had blocked three key provisions of President Donald Trump’s DEI-related EOs.
The ruling comes after the federal judge in Maryland who issued the preliminary injunction had raised concerns over reports that federal agencies were potentially violating the ruling.
A three-judge panel for the Fourth Circuit ruled that the government had met its burden to stay, pending appeal, the nationwide preliminary injunction enjoining the termination, certification, and enforcement provisions of President Donald Trump’s DEI-related orders, EO 14151 and EO 14173. But in doing so, all three judges on the Fourth Circuit panel issued separate concurring opinions.
The ruling reverses U.S. District Judge Adam B. Abelson, who, on March 3, 2025, refused to stay the preliminary injunction. Judge Abelson issued the preliminary injunction on February 21, 2025, finding the plaintiffs were likely to succeed on the merits that the EOs are vague and chill free speech in violation of the First and Fifth Amendments.
While agreeing that a stay was appropriate, Fourth Circuit Chief Judge Albert Diaz, in his concurring opinion, questioned the criticism of DEI and the “people of good faith who work to promote diversity, equity, and inclusion.”
“Under the most basic tenets of the First Amendment, there should be room for open discussion and principled debate about DEI programs, and whether its corresponding values should guide admissions, hiring, scholarship, funding, or workplace and educational practices,” Chief Judge Diaz wrote. “And all Americans should be able to freely consider how to continue empowering historically disadvantaged groups while not reducing the individuals within those groups to an assigned racial or sex-based identity.” (Internal quotations omitted.)
On the other hand, Judge Pamela A. Harris wrote, “[w]hat the Orders say on their face and how they are enforced are two different things,” noting that the lawsuit “may well raise serious First Amendment and Due Process concerns” but that it “does not directly challenge” a specific agency action.
Similarly, Judge Allison Jones Rushing criticized the scope of the injunction, which she characterized as enjoining “nondefendants from taking action against nonplaintiffs” and the ripeness of the lawsuit because it “does not challenge any particular agency action implementing the Executive Orders.” (Emphasis in original.)
The Fourth Circuit’s stay comes just hours after Judge Abelson held a status conference to consider the plaintiffs’ emergency motion regarding reports that federal agencies refused to comply with the preliminary injunction.
The plaintiffs presented evidence that one of the plaintiffs, the City of Baltimore, was facing a deadline to sign a recent funding contract from the U.S. Department of Housing and Urban Development (HUD) containing language requiring the city to certify that it does not operate any DEI programs that violate any applicable antidiscrimination laws. The plaintiffs alleged that until the City of Baltimore signs the contract, it cannot recoup from HUD the costs it has already expended for providing services to people without permanent housing.
While Judge Abelson found the government’s representation that it would remedy the provision sufficient for the time being, the judge said he would order an expedited briefing on the matter and called the reports of noncompliance “concerning.” However, that briefing now appears moot as the Fourth Circuit has stayed the preliminary injunction. At this time, it is unclear how Judge Abelson will respond.
On March 10, 2025, Judge Abelson clarified that the preliminary injunction applied to all the named defendants beyond the president, including the “other federal executive branch agencies, departments, and commissions, and their heads, officers, agents, and subdivisions directed pursuant to” the executive orders.
Essential Employee Handbook Considerations for Florida Employers in 2025
With a new presidential administration and the start of the 2025 Regular Session of the Florida Legislature, Florida employers face a dynamic landscape of evolving workplace policies and legal requirements. From updates in discrimination and harassment prevention to new leave laws and medical marijuana protections, updating handbooks to stay compliant is more crucial than ever.
Quick Hits
Florida employers are facing a complex landscape of evolving workplace policies and legal requirements in 2025, including updates in discrimination prevention, leave laws, and medical marijuana protections.
Employers may want to regularly review and update their workplace policies to ensure compliance with changing laws, particularly in areas like discrimination, harassment, leave policies, and wage disputes.
Key updates for Florida employee handbooks in 2025 include removing references to outdated presidential executive orders, implementing reasonable suspicion drug testing, and ensuring compliance with new paid sick leave and family leave laws.
Employers may want to regularly review and update their workplace policies and procedures to ensure compliance with evolving laws. This can be particularly important in litigation involving discrimination and harassment, leave policies, wage and hour disputes, and at-will employment. This article highlights key employee handbook updates Florida employers might want to consider in 2025.
Discrimination, Harassment, and Retaliation Prevention
Diversity, Equity, and Inclusion (DEI) and Equal Employment Opportunity (EEO). As one of his first acts in office, President Donald Trump issued six executive orders (EO) impacting federal contractors, subcontractors, and grant recipients. One of these revoked EO 11246 (requiring affirmative action in employment for minorities and females, issued in 1965 by President Lyndon Johnson) and established new certification requirements for “unlawful DEI.” Impacted Florida employers may want to remove handbook references to EO 11246 and carefully review DEI and EEO policies to ensure compliance while also being mindful of state and local laws. For instance, multiple Florida counties have ordinances protecting sexual orientation and gender identity or expression.
Employer Work Rules and the National Labor Relations Board (NLRB). On February 14, 2025, NLRB Acting General Counsel William B. Cowen rescinded a series of memoranda issued by his predecessor, including those regarding electronic monitoring of employees, restrictive covenants, and others. The move effectively reshapes federal labor law and signals a new policy direction for the NLRB under the Trump administration. More changes are likely to follow, including potentially relaxing prior scrutiny of other employer work rules.
Medical Marijuana Protections. In a recent lawsuit, Giambrone v. Hillsborough County, a Florida state court granted summary judgment in favor of a former public employee who had been placed on unpaid administrative leave after testing positive for alleged off-duty use of medical marijuana. In light of this decision, Florida employers may want to consider implementing reasonable suspicion drug testing and adding an interactive disability accommodation process to existing drug testing policies for job applicants or employees who are medical marijuana cardholders. However, Florida employers still do not need to allow their employees to show up to work under the influence of medical marijuana or possess marijuana on company property. Public employers in Florida may also want to monitor pending House Bill 83 / Senate Bill 142, which, if passed, would provide specific job protections for medical marijuana cardholders.
Mandatory Leave
Paid Sick Leave (PSL). PSL laws are continually evolving, with eighteen states and Washington, D.C., having PSL requirements. In 2025, Alaska, Missouri, and Nebraska were added to this list. In recent years, states like California, Colorado, Illinois, Michigan, New York, Oregon, and Washington have increased required hours and expanded reasons for taking leave. Florida employers may want to be mindful that existing paid time off policies may not be compliant in other states and localities. A handbook addendum or separate state policy may be required, including for remote workers. Understanding which laws apply is critical for compliance.
Family and Medical Leave (FML). Ten states and Washington, D.C., have mandatory paid FML programs, with additional states like Delaware, Maine, and Minnesota scheduled to implement programs soon, and Maryland, where elements of the program may be delayed until 2027. While Florida does not have mandatory FML leave at the state level, employers doing business in Miami-Dade County should note a local ordinance may expand what the federal Family and Medical Leave Act (FMLA) typically allows when caring for a grandparent with a serious health condition. As of 2023, Florida’s insurance code includes voluntary paid family leave as a new form of insurance.
Jury Duty. Florida law provides general protections for employees when they serve on jury duty or as witnesses in legal proceedings. Local ordinances in Broward and Miami-Dade counties require jury duty pay for certain employees.
Wage and Hour Policies
Timekeeping and Pay. Wage and hour litigation continues to be one of the most frequently filed types of employment litigation in Florida and is one of the most common class or collective actions filed across the country. Employers may want to consider adopting policies requiring employees to thoroughly review their time and pay records to ensure accuracy. Many employee handbooks do not provide specific contact information for employees to report concerns regarding their hours and pay, leaving employers vulnerable to the argument that employees did not have an avenue to resolve complaints. Employers may also want to include a provision prohibiting retaliation against employees who come forward with complaints about their hours or pay.
Child Labor Laws. Recent changes to Florida’s child labor laws enacted in 2024 may impact policy provisions for employers with minors in the workplace. Restrictions on the amount of work hours and days of work have been eased for minors sixteen and seventeen years old. An updated poster is also available.
Legal Disclaimers and Keeping Contracts Separate
At-Will Disclaimers. Employers may want to consider including a disclaimer at the beginning of their handbooks expressly stating that the handbook does not constitute a contract, that the employer can change policies without prior notice, and reiterating the at-will nature of the employment relationship. Moreover, contracts and other legally binding instruments—including noncompete, Non solicitation, and nondisclosure agreements, along with arbitration agreements and releases of liability—should be kept separate from the handbook. This helps employers enforce these obligations post-employment and may protect the entire handbook from being construed as a contract. To avoid conflicts with official plan documents, it may be best to communicate employee benefits details separately from the handbook.
Introductory Periods. Implementing an initial introductory period of up to ninety calendar days can be beneficial to Florida employers when defending unemployment claims. Dismissing an employee for unsatisfactory performance during this period may avoid unemployment benefits being charged against the employer’s reemployment assistance account in accordance with section 443.131, Florida Statutes. Employers must give notice of the introductory period within the employee’s first seven days of work, which can be accomplished through a handbook acknowledgment.
Employee Acknowledgments. Employers may want to make it a standard practice to obtain signed acknowledgments from all employees when they receive the handbook and whenever significant updates are made. Consider including directions for how employees can access or obtain copies of the handbook. This can be critical in legal disputes where an employee claims he or she was unaware of certain policies or procedures.
Language Barriers. If a significant portion of the workforce is not proficient in English, translating the acknowledgement and handbook into the primary languages spoken by employees may be beneficial. This ensures that all employees can understand the content, particularly with the prevalence of native Spanish speakers in Florida.
U.S. Department of Education’s ‘Dear Colleague’ Letter Prohibiting DEI and FAQs Document Challenged in Federal Court
On March 5, 2025, the National Education Association (NEA) and its New Hampshire affiliate (NEA-NH) sued the U.S. Department of Education, challenging a recently issued “Dear Colleague Letter” (DCL) that informed schools that they would lose federal funding if they continued their diversity, equity, and inclusion (DEI) programs.
The DCL was followed by frequently asked questions (FAQs) guidance, issued on February 28, 2025, by the department’s Office for Civil Rights (OCR) clarifying the department’s interpretation of the meaning of the Supreme Court of the United States’ 2023 decision in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College (SFFA), which struck down affirmative action in college admissions.
Quick Hits
On February 28, 2025, the U.S. Department of Education’s Office for Civil Rights issued FAQs articulating the “broad implications” of the Supreme Court’s 2023 SFFA decision, which held that certain race-conscious college admissions policies violated the Equal Protection Clause of the Fourteenth Amendment.
The FAQs explain “how OCR will interpret the [SFFA] ruling in its enforcement of Title VI of the Civil Rights Act of 1964 and its implementing regulations.”
Noting that the Education Department’s February 14, 2025, “Dear Colleague Letter” advised educational institutions to “ensure that their policies and actions compl[ied] with existing civil rights law” and to “cease all reliance on third-party contractors” and proxies to “circumvent prohibitions on the use of race,” the FAQs emphasize the broad scope of Title VI’s coverage, which applies to “any program or activity receiving Federal financial assistance from the Department of Education,” and that schools’ “responsibility not to discriminate against students applies to the conduct of everyone over whom the school exercises some control, whether through a contract or other arrangement.”
A lawsuit seeking to enjoin and vacate the FAQs and DCL was filed on March 5, 2025, alleging that in issuing the DCL, the Department of Education exceeded its statutory authority under Title VI, the Department of Education Organization Act (DEOA), and the General Education Provisions Act (GEPA), penalized protected speech on issues of race and DEI, and violated the Administrative Procedure Act.
The lawsuit alleges that the DCL threatens schools with a loss of federal funding if they continue DEI programs, infringes on constitutional rights, lacks clarity, and disrupts educational practices aligned with civil rights laws. The lawsuit, National Education Association and National Education Association-New Hampshire v. U.S. Department of Education, seeks declaratory and injunctive relief, including preliminarily and permanently restraining and enjoining the Department of Education from enforcing the DCL and asking the court to declare unlawful, vacate, and set aside the DCL, the “End DEI” portal, and the FAQs.
The DCL and FAQs
The DCL warned that the Department of Education’s interpretation of laws prohibiting racial preferences must be followed or recipients would risk funding. The Department of Education indicated its intention to begin enforcing within two weeks of the date of the DCL its interpretation of legal requirements for institutions under SFFA, Title VI of the Civil Rights Act of 1964, and the Equal Protection Clause of the U.S. Constitution.
The DCL read: “At its core, the test is simple: If an educational institution treats a person of one race differently than it treats another person because of that person’s race, the educational institution violates the law. Federal law thus prohibits covered entities from using race in decisions pertaining to admissions, hiring, promotion, compensation, financial aid, scholarships, prizes, administrative support, discipline, housing, graduation ceremonies, and all other aspects of student, academic, and campus life.”
At the two-week mark, the Department of Education instead issued FAQs, stating it would investigate allegations of race discrimination in all aspects of university life, though the SFFA decision was limited to consideration of race in admissions policies only.
The FAQs provide answers to fifteen questions regarding the use of race in various aspects of education, including admissions, financial aid, scholarships, hiring, training, discipline, housing, graduation ceremonies, and curricula. They provide additional context, explaining in FAQ 6 that “when there is a limited number or finite amount of educational benefits or resources—such as, inter alia, admissions spots in an incoming class, financial aid, scholarships, prizes, administrative support, or job opportunities—a school may not legally take account of a student’s race in distributing those benefits or resources, even if race is only being considered as a positive or plus factor, because to advantage members of one race in a competitive or zero-sum process is necessarily to disadvantage those of a different race.”
With respect to the use of proxies, such as income or zip codes, the DCL also explains the Education Department’s current view that even the use of non-racial proxies, such as eliminating standardized testing, is “unlawful” if the purpose is “to achieve a desired racial balance or to increase racial diversity.” This is one of the views that is challenged in the lawsuit brought by the NEA.
The FAQs appear to curtail a widely discussed (and debated) area since the SFFA decision—whether admissions essays should provide students the opportunity to reveal their race. Writing for the majority in the SFFA decision, Chief Justice Roberts wrote, “[N]othing in this opinion should be construed as prohibiting universities from considering an applicant’s discussion of how race affected his or her life, be it through discrimination, inspiration, or otherwise. But … universities may not simply establish through application essays or other means the regime we hold unlawful today.” (Internal citations omitted.)
With respect to the use of admissions essays, the Department of Education’s FAQs caution (in FAQ 10), “Schools that craft essay prompts in a way that require[s] applicants to disclose their race are illegally attempting to do indirectly what cannot be done directly, as are admissions policies that hold brief interviews in order to visually assess an applicant’s race.”
On this note, the DCL, analyzing and interpreting the SFFA decision, stated, “[A] school may not use students’ personal essays, writing samples, participation in extracurriculars, or other cues as a means of determining or predicting a student’s race and favoring or disfavoring such students.”
With respect to DEI programs, the FAQs explain (in FAQ 8) that programs that are educational and open to all are lawful, whereas programs that segregate attendees by race or ethnicity are not:
“Schools may not operate policies or programs under any name that treat students differently based on race, engage in racial stereotyping, or create hostile environments for students of particular races. For example, schools with programs focused on interests in particular cultures, heritages, and areas of the world would not in and of themselves violate Title VI, assuming they are open to all students regardless of race.” The FAQs caution that DEI programming may give rise to “hostile environments” and that such claims will be balanced against First Amendment rights. The FAQs further explain (in FAQ 9) that schools must respond to and investigate hostile environment complaints:
In determining whether a racially hostile environment exists, OCR will examine the facts and circumstances of each case, including the nature of the educational institution, the age of the students, and the relationships of the individuals involved. For example, an elementary school that sponsors programming that acts to shame students of a particular race or ethnicity, accuse them of being oppressors in a racial hierarchy, ascribe to them less value as contributors to class discussions because of their race, or deliberately assign them intrinsic guilt based on the actions of their presumed ancestors or relatives in other areas of the world could create a racially hostile environment. But similar themes in a class discussion at a university would be less likely to create a racially hostile environment. In all cases, the facts and circumstances of that discussion will dictate the answer to that inquiry.
FAQ 9 suggests that at the university level, “requiring students to participate in privilege walks, segregating them by race for presentations and discussions with guest speakers, … mandating courses, orientation programs, or trainings that are designed to emphasize and focus on racial stereotypes, and assigning them coursework that requires them to identify by race and then complete tasks differentiated by race—are all forms of school-on-student harassment that could create a hostile environment under Title VI.”
The implications of this interpretation of the SFFA decision are significant for educational institutions. According to the Department of Education, SFFA makes unlawful the use of racial preferences in admissions and other areas (such as campus life and student activities) under Title VI and the Equal Protection Clause. The department cautions that both public and private higher education institutions must ensure that their policies comply with the legal standards laid out by the department to avoid discrimination based on race, color, or national origin. The FAQs repeat OCR’s intention to enforce its interpretation of the SFFA ruling in its oversight of educational institutions that receive federal financial assistance.
On February 18, 2025, President Trump signed Executive Order (EO) 14215, stating that only the president and the attorney general can interpret the law for the executive branch. This suggests that institutions cannot rely upon judicial interpretations or the courts to correct the FAQs’ misinterpretations, if any, of the SFFA’s decision on racial preferences.
The Lawsuit
The lawsuit argues that the DCL “drastically disrupts Plaintiffs in their ability to provide education to students in accordance with professional requirements and best practices” because it “threaten[s] schools and colleges across the country with the loss of federal funding in a matter of days if they continue[] to pursue … ‘DEI programs.’” The plaintiffs argue that the DCL infringes on constitutional rights, lacks clarity, and disrupts educational practices aligned with civil rights laws. The plaintiffs state that the DCL threatens to cut federal funding for schools that continue DEI programs and argue that it is vague, infringes on constitutional rights such as academic freedom in higher education, freedom of speech, and freedom of association under the First Amendment, and disrupts educational practices.
The lawsuit also alleges multiple violations of the Administrative Procedure Act that, in some respects, mirror the procedural challenges lodged against the Biden administration’s 2024 Title IX final rule. These include allegations that the DCL is arbitrary and capricious, as it lacks a reasoned explanation, fails to consider important aspects of the problem, and disregards material facts and reliance interests; is an abuse of discretion; represents a dramatic shift from prior Education Department guidance without acknowledging or explaining the change; is not in accordance with current law because it conflicts with Title VI and its implementing regulations, and violates the DEOA and GEPA by exercising control over curriculum and instructional materials; and is impermissibly vague and violates Fifth Amendment rights to due process. As an example of the latter, the lawsuit reads:
[As] an example, although the Letter asserts that “DEI programs” unlawfully “discriminate,” it fails to define what constitutes a “DEI program,” explain how such programs “preference” certain racial groups, or provide criteria for determining the circumstances under which educational programs that in any way address race might violate federal antidiscrimination law. As illustrated by the difficulties facing NEA, NEA-NH, and their Members, … the letter fails to provide adequate notice about what speech and programming regarding race, diversity, equity, or inclusion is prohibited under federal law. The ambiguity permeating the Letter’s discussion of DEI programs also invites arbitrary and selective enforcement against educational programs that advocate views on race inconsistent with those espoused by [the U.S. Department of Education].
The lawsuit also asserts that the DCL constitutes a final agency action subject to judicial review because it “marks the ‘consummation’ of the agency’s decisionmaking process, sets forth the agency’s conclusions that schools are acting unlawfully, and proscribes new substantive obligations ‘from which legal consequences will flow.’” It argues that the “End DEI” portal and the FAQs “reflect and incorporate this final agency action.”
Key Takeaways
The Department of Education is doubling down on its interpretation of SFFA, and EO 14215 significantly limits the odds that these interpretations will be internally challenged or adjusted. A lawsuit has been filed, and it remains to be seen whether the plaintiffs’ request for injunctive relief will be granted. State attorneys general and state regulators are also issuing their own guidance to higher education institutions and K–12 schools.
For now, schools may want to take note of the Department of Education’s interpretations and warning that the OCR will vigorously enforce the law and that noncompliance may result in an educational institution’s loss of federal funding.
UK Financial Regulators Drop Diversity and Inclusion Rules but Keep Culture in Focus
On 11 March 2025, the UK’s financial regulators confirmed they have decided not to move forward with proposed diversity and inclusion (D&I) rules for financial firms. This decision in a letter by the Financial Conduct Authority (FCA) and a letter by the Prudential Regulation Authority (PRA) marks the end of a long-running debate that has been ongoing since 2023. However, while formal D&I improvement measures are off the table, culture remains firmly in the regulators’ sights, with new rules on non-financial misconduct expected by June 2025.
No New Rules to Improve D&I
The decision not to introduce new D&I regulations follows industry pushback, set against the global landscape where D&I has become a polarized topic in some jurisdictions, including the U.S.. Regulators initially aimed to mandate D&I policies, setting out that diversity was crucial to improving governance, decision-making, and reducing groupthink risks. However, firms raised concerns about the administrative burden and costs associated with mandatory requirements, arguing that existing legislation already addresses many aspects of workplace equality and inclusion.
Culture Still on the FCA’s Agenda
Despite the abandonment of new D&I rules, culture within financial firms remains a key focus for the FCA. It has made it clear that it intends to publish new rules on non-financial misconduct by the end of June 2025. This commitment highlights the FCA’s ongoing effort to tackle cultural issues within the sector, including misconduct that falls outside traditional financial violations.
Non-financial misconduct covers a wide range of issues, including harassment and other inappropriate behaviour within the workplace. By maintaining pressure on firms to address these cultural challenges, the FCA is signalling that it will not tolerate harmful practices within UK’s financial services industry.
Firms should take note that non-financial misconduct will soon be in the regulator’s enforcement remit, and proactive steps to build positive, respectful workplace environments are still important.
It’s That Time Of Year Again – California Pay Data Reporting Is Due May 14, 2025!
As California private employers of 100 or more employees and/or 100 or more workers hired through labor contractors may know, it is time to annually report pay, demographic, and other workforce data to the Civil Rights Department (“CRD”).
Although this year’s reporting requirements are mostly the same as last year’s (previously covered here), CRD has revised race and ethnicity categories as follows:
Adding a new race and ethnicity category—Middle Eastern or North African (MENA)—to California’s pay data reporting.
Removing “Other” from the “Native Hawaiian or Other Pacific Islander” category name.
Using “Multiracial and/or Multiethnic” terminology rather than “Two or More Races.”
Other changes from prior years remain in effect, such as:
Data fields: Employers must report whether employees worked remotely during the Snapshot Period.
Race, ethnicity, sex: Reporting “unknown” race/ethnicity or sex of a labor contractor employee is no longer permitted.
Labor contractor worker reporting: In addition to the Payroll Employee Report that all private employers with 100 or more employees (with at least one employee based in California) must file, adding the requirement that a private employer with 100 or more workers hired through labor contractors in the prior calendar year (with at least one worker based in California) must file a separate Labor Contractor Employee Report that covers workers hired through labor contractors in the prior calendar year.
Mean and median rates: Requiring employers to calculate and report the mean and median hourly rate of their payroll employees and/or labor contractor employees, by establishment, pay band, job category, race/ethnicity, and sex.
Increased penalties for employers who fail to file: Permitting CRD to obtain a monetary penalty against (1) employers ($100 per employee against an employer who fails to file a required report, and $200 per employee for a subsequent failure), and (2) against any labor contractor that fails to supply necessary data to a client employer.
For further information and guidance related to the pay data reporting requirements, California employers are well-advised to consult the CRD’s updated (e.g., this year’s reporting templates and the updated User Guide available here) and new (e.g., the Handbook) resources. California employers also may wish to consult with counsel in advance of the May 14, 2025 deadline.