Five Practical Tips for Government Contractors Navigating the Executive Order Chaos
Federal government contractors are living in a climate of uncertainty. Executive orders affecting government contracts are being issued at a rapid pace. The executive orders tend to be broad and high-level with regulatory guidance to follow. This is not abnormal. However, the sheer number of executive orders and the magnitude of the regulatory changes they seek to impose is a new phenomenon. Contractors are left to determine what they should be doing, if anything, and when. Set forth below are practical suggestions for contractors to consider during this unsettling time.[1]
Communicate with your Contracting Officer
During the chaos, it is important to communicate with your contracting officer. Only contracting officers are authorized to modify contracts. Do not blindly accept direction from contract specialists or others who purport to be speaking on behalf of the government. Direction received from anyone other than a contracting officer should be immediately relayed to your contracting officer with a request for clarification or guidance.
Also, be prepared for unclear responses from your contracting officer. Like you, contracting officers also are living through this chaos. They may not have received clear direction to pass on to contractors. Aim to keep your communications with your contracting officer respectful.
Executive Orders are not Contract Modifications
Remember that executive orders are not contract modifications. Contractors should not change their contract performance or their compliance with, for example, socioeconomic programs unless or until a contract modification signed by a contracting officer. This may be difficult for contractors when they think they can see the writing on the wall. But regulatory and policy changes can occur and, thus, even well-intentioned contractors might make changes they did not need to make or that are different from what is required from a formal contract modification.
Continue Contract Performance
Along the same lines, contractors need to continue contract performance in accordance with the four corners of the contract unless or until a contract is modified. Failure to do so could be considered breach of contract. With the plethora of contract terminations being reported, contractors should not put themselves in the crosshairs by failing to comply with the terms and conditions of their contract, thereby giving the government a basis to terminate for default. And remember, if you believe the government has breached or improperly changed a contract, a contractor is required to continue performance and seek relief in accordance with the FAR Disputes clause.
Communicate with your Subcontractors
Just as a prime contractor craves concrete guidance from a contracting officer regarding what to do, subcontractors also need guidance and oftentimes more so, because they are unable to communicate directly with the government. Thus, a good practice for prime contractors is to pass along any guidance received from a contracting officer to its subcontractors. Prime contractors also should remind their subcontractors about their obligations to continue contract performance.
Prepare to Defend Your Contract
Contractors also should be prepared to explain the importance of their contracts to the government. To be proactive, contractors should draft narratives explaining the importance of their work and how their performance exceeds contract requirements. Contracts that are considered to “add value” are less likely to be found on the so-called “chopping block.” If appropriate, a contractor should consider including recommendations, for example, regarding how its work can be performed more effectively or efficiently.
We hope this practical advice will help you navigate the government contracting chaos until the dust settles.
[1] See our previous related blog posts: Understanding President Trump’s Executive Orders on DEI: Implications for Federal Contractors; What Contractors Facing Terminations, Stop-Work Orders, and Suspension of Work Orders Directed by the Trump Administration Need to Know; Fixed Price Contracts: Government Contractors Beware; What GSA Contractors Need to Know About the New FAR Deviation for Revoked Executive Order 11246, Equal Employment Opportunity; Preliminary Injunction Granted Related to DEI-Related Executive Orders—Takeaways for Government Contractors; President Trump Signs New Executive Order: “Implementing the President’s ‘Department of Government Efficiency’ Cost Efficiency Initiative”—What Federal Contractors Need to Know.
DOJ Moves to Challenge Illinois Nonprofit Board Disclosure Law
The U.S. Department of Justice (DOJ) has been granted judicial leave to intervene in the American Alliance for Equal Rights’ (AAER) suit against the State of Illinois challenging the state’s diversity, equity, and inclusion (DEI) law requiring nonprofit organizations to make certain demographic data public on their websites. The intervention comes as President Donald Trump’s anti-DEI agenda takes shape.
Quick Hits
An activist group has asked a federal district court to strike down an Illinois law requiring the disclosure of nonprofit organizations’ board demographics.
The DOJ has intervened in the case, claiming that the law violates the Fourteenth Amendment.
The intervention is part of the DOJ’s effort to eliminate DEI practices nationwide.
On March 11, 2025, the U.S. District for the Northern District of Illinois granted the DOJ’s motion to intervene in American Alliance for Equal Rights v. Bennett. The plaintiff, American Alliance for Equal Rights (AAER), is a nonprofit group that has opposed a number of diversity programs nationwide.
Here, the AAER is challenging an Illinois law that requires qualifying nonprofits to disclose the demographic makeup of their directors and officers on their websites. The demographic categories include race, ethnicity, gender, disability status, veteran status, sexual orientation, and gender identity. AAER alleges that the statute violates the Fourteenth Amendment of the U.S. Constitution by encouraging organizations to discriminate based on race and the First Amendment of the U.S. Constitution by compelling organizations to speak about demographic issues that they otherwise would not discuss.
On March 4, 2025, the DOJ moved to intervene in the case. The government cited Students for Fair Admissions, Inc. v. Harvard College (SFFA), arguing that the Illinois law violates the Equal Protection clause on account of race. SFFA is the 2023 Supreme Court of the United States decision eliminating affirmative action in higher education. In a press release, the DOJ called the intervention “an early step toward eradicating illegal race and sex preferences across the government.” U.S. Attorney General Pamela Bondi emphasized the department’s intention to intervene in cases where a state “encourages DEI instead of merit.” Although certain portions of President Trump’s anti-DEI executive orders have been preliminarily enjoined, the move shows the DOJ continues to execute the administration’s policy goals in other ways.
Next Steps
Although the case is narrow in scope, the outcome may shed light on the Trump administration’s views on the legality of demographic reporting in other contexts and how the SFFA decision may be applied outside of higher education.
Nationwide Injunction Shuts Down Enforcement of Trump’s DEI Executive Orders
On February 21, 2025, a federal district court judge issued a nationwide preliminary injunction that blocks enforcement of three major provisions of President Trump’s Executive Orders related to Diversity, Equity and Inclusion (DEI) programs:
Executive Order 14151, “Ending Radical and Wasteful Government DEI Programs and Preferencing.”
Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”
(Each an EO and collectively referred to as the EOs.)
The National Association of Diversity Officers in Higher Education filed a lawsuit in the U.S. District of Maryland (Maryland District Court) challenging the constitutionality of these EOs, arguing they are vague under the Fifth Amendment and violate the First Amendment’s Free Speech Clause.
Below is a summary of the enjoined provisions.
Termination Provision: Requires Executive agencies to terminate “equity-related grants or contracts.”
Certification Provision: Requires federal contractors and grantees to certify they will not operate programs promoting DEI that violate Federal anti-discrimination laws.
Enforcement Provision: Directs The U.S. Attorney General to investigate and take actions (e.g., civil compliance investigations) against private sector entities continuing DEI practices.
While the injunction prevents the executive branch from enforcing these EOs, U.S. District Court Judge Adam Abelson allowed the U.S. Attorney General to continue its investigation for a report on ending illegal discrimination and preferences pursuant to EO 14173.
The Trump administration filed a motion with the Fourth Circuit Court to appeal the nationwide injunction. Depending on whether the Fourth Circuit upholds or reverses the injunction, the case may go to trial to determine if the Trump administration’s actions to ban DEI policies and practices are constitutional. Pending the appeal, the Trump administration requested a stay of the preliminary injunction which was denied by Judge Abelson. The Maryland District Court stressed the Trump administration was unable to demonstrate a strong likelihood of success on the merits. Additionally, the Court emphasized, “the chilling of the exercise of fundamental First Amendment rights weighs strongly in favor of the preliminary injunction and against a stay pending appeal.”1
On March 10, 2025, Judge Abelson issued further clarification regarding the scope of the preliminary injunction, stating that it applies to all federal agencies, departments and commissions, not just the named defendants. He explained that limiting the injunction to only the named parties would create an unfair situation where the termination status of a federal grant or the certification requirements for federal contractors would depend on which specific federal agency the grantee or contractor works with for current or future funding. This would result in inequitable treatment in an area that requires uniformity. Consequently, considering President Trump’s directives for all federal agencies, departments and commissions to adhere to the Termination and Certifications Provisions, the preliminary injunction will now encompass all federal agencies to prevent any inconsistent application.
Since the Maryland lawsuit, additional complaints against the anti-DEI EOs have been filed in Illinois, California and Washington D.C., with similar legal arguments to the Maryland case. We will continue to monitor these lawsuits as they progress through the court system.
You can read more about the Maryland lawsuit and the implications of these EOs in our previous alert linked here.
[1] Nat’l Ass’n of Diversity Officers in Higher Educ. v. Trump, Memorandum Opinion and Order Denying Motion to Stay Injunction Pending Appeal, Case No. 25-cv-00333-ABA (Mar. 3, 2025), 6.
Employment Law This Week: Should Employers Shift Workforce Data Collection Under President Trump? [Video] [Podcast]
As featured in #WorkforceWednesday®: This week, we examine the risks tied to diversity, equity, and inclusion (DEI) initiatives that employers face due to the Trump administration’s executive orders and the ensuing scrutiny from federal agencies, including the Equal Employment Opportunity Commission (EEOC).
Should Employers Shift Workforce Data Collection Under President Trump?
President Trump’s two anti-DEI executive orders are temporarily blocked, but some employers are adjusting policies and shifting the way they collect workforce data. While critical obligations, such as EEO-1 reporting, remain in place, the EEOC’s acting chair has indicated the agency will prioritize addressing race and gender discrimination and bias.
In this week’s episode, Epstein Becker Green attorneys Jill K. Bigler and Briar L. McNutt discuss how employers can balance compliance with federal, state, and international regulations while effectively mitigating risks.
DEI Executive Orders: Back Door Enforcement After the Injunction [Podcast]
In this podcast, shareholders Nonnie Shivers and Scott Kelly delve into the enforcement activities after a preliminary injunction blocked key provisions (including the certification requirement) of two executive orders (EOs) issued to eliminate “illegal” diversity, equity, and inclusion (DEI) programs and initiatives. Scott (who co-chairs the firm’s Government Contracting and Reporting Practice Group) and Nonnie (who co-chairs the Diversity, Equity, and Inclusion Compliance Practice Group) discuss the implications of the national injunction recently issued by a federal judge, the ongoing enforcement activities not halted by the injunction, and the broader impact on federal contractors and DEI programs across all employers. Nonnie and Scott also highlight the importance of staying informed and assessing risk tolerance in light of the evolving legal landscapes.
Federal Judge Clarifies Scope of Preliminary Injunction Enjoining President Trump’s DEI-Related Executive Orders
On March 10, 2025, a federal judge in Maryland clarified the scope of the nationwide preliminary injunction that enjoins key portions of two of President Donald Trump’s diversity, equity, and inclusion (DEI)–related executive orders (EOs), stating that the injunction applies to all federal agencies.
Quick Hits
On February 21, 2025, a federal judge granted a nationwide preliminary injunction that enjoined key provisions of President Trump’s executive orders aimed at “illegal” DEI initiatives.
On March 3, 2025, the judge refused to halt the preliminary injunction, pending the government’s appeal to the Fourth Circuit Court of Appeals.
On March 10, 2025, the judge clarified that the preliminary injunction applies to all federal executive branch agencies, departments, and commissions, not just those that were specifically named in the complaint.
U.S. District Judge Adam B. Abelson clarified that the nationwide preliminary injunction enjoining the termination, certification, and enforcement provisions of EO 14151 and EO 14173 “applies to and binds Defendants other than the President, as well as all other federal executive branch agencies, departments, and commissions, and their heads, officers, agents, and subdivisions directed pursuant to” those executive orders.
The court’s February 21, 2025, preliminary injunction order defined the “Enjoined Parties” as “Defendants other than the President, and other persons who are in active concert or participation with Defendants.” The plaintiffs filed a motion to clarify the scope of the order. The government argued that the court lacked jurisdiction to rule on the motion, and that only the specific departments, agencies, and commissions named as additional defendants in the complaint were bound by the preliminary injunction. The complaint named the following defendants: the Office of Management and Budget, the U.S. Departments of Justice, Health and Human Services, Education, Labor, Interior, Commerce, Agriculture, Energy, and Transportation, along with the heads of those agencies (in their official capacities), the National Science Foundation, and President Trump in his official capacity. The government argued that including other departments, agencies, and commissions as enjoined parties would be inconsistent with Federal Rule of Civil Procedure 65(d), Article III of the U.S. Constitution’s standing requirement, and traditional principles of equity and preliminary injunctive relief.
The court disagreed. First, according to the court, the plaintiffs have shown a likelihood of success on the merits that the termination, certification, and enforcement provisions are unconstitutional, so any agencies acting pursuant to those provisions “would be acting pursuant to an order that Plaintiffs have shown a strong likelihood of success in establishing is unconstitutional on its face.”
Second, the termination and certification provisions were directed to all agencies, the enforcement provision was directed to the U.S. Department of Justice, and the president was named as a defendant in the complaint; thus, the preliminary injunction (in both its original and clarified forms) “is tailored to the executive branch agencies, departments and commissions that were directed, and have acted or may act, pursuant to the President’s directives in the Challenged Provisions of” EO 14151 and EO 14173.
Third, only enjoining those agencies that were specifically named in the complaint, despite the fact that the president was named as a defendant, would provide incomplete relief to the plaintiffs because their speech is at risk of being chilled by non-named agencies as well. In addition, the court held that “[a]rtificially limiting the preliminary injunction in the way Defendants propose also would make the termination status of a federal grant, or the requirement to certify compliance by a federal contractor, turn on which federal executive agency the grantee or contractor relies on for current or future federal funding—even though the agencies would be acting pursuant to the exact same Challenged Provisions,” resulting in “‘inequitable treatment.’” Thus, the court granted the plaintiffs’ motion to clarify that the preliminary injunction applies to every agency in the executive branch.
The North Carolina General Assembly’s 2025 Session: Employment-Related Bills to Watch
The 2025 session of the North Carolina General Assembly is in full swing. Here is a list of proposed legislation that employers should pay attention to.
Quick Hits
The 2025 session of the North Carolina General Assembly is considering employment-related bills related to union organizing and collective bargaining, nondiscrimination in the workplace, noncompete and nonpoaching agreements, and DEI.
Senate Bill 120 / House Bill 207 aim to prohibit employers from restricting labor organizations and requiring employees to refrain from union membership as a condition of employment.
Senate Bill 154 / House Bill 168 seek to prevent hair-based discrimination in workplaces, schools, and public spaces by expanding the definition of race-based discrimination to include traits historically associated with race, such as natural hairstyles.
House Bill 269 would ban noncompete and nonpoaching agreements for employees earning less than $75,000 a year, effective July 1, 2025.
Remove Barriers to Labor Organizing (Senate Bill 120 and House Bill 207)
Senate Bill (SB) 120 and House Bill (HB) 207, short-titled, “Remove Barriers to Labor Organizing,” was referred to the North Carolina House of Representatives’ Rules, Calendar, and Operations of the House Committee and the North Carolina Senate’s Rules and Operations of the Senate Committee in late February. The legislation would prohibit employers from restricting labor organizations and associations from organizing within the state. This prohibition would restrict employers from requiring employees to refrain from union membership as a condition of employment or continued employment.
North Carolina CROWN Act (Senate Bill 154 and House Bill 168)
The North Carolina CROWN Act legislationwas reintroduced this session and echoes the bipartisan federal “Creating a Respectful and Open World for Natural Hair Act,” or “CROWN Act,” bill introduced in February 2025 by Senators Cory Booker (D-NJ) and Susan Collins (R-ME). The North Carolina CROWN Actwould protect individuals in the state from hair-based discrimination and retaliation in workplaces, schools, and public spaces. That includes preventing employers from enacting or enforcing policies on hair and grooming that would disproportionately affect people with “natural” or “cultural” hairstyles, including Bantu knots, braids, locks, and twists. It would also expand the definition of race-based discrimination to include “traits historically associated with race, including but not limited to, hair texture, hair type, and protective styles.” More than half of the states have enacted CROWN Act bills.
Equality in State Agencies/Prohibition on DEI (House Bill 171)
HB 171, short-titled, “Equality in State Agencies/Prohibition on DEI,” would apply to state employers and would prohibit any state agency from “promoting, supporting, funding, implementing, or maintaining workplace DEI programs, policies, or initiatives,” including in state government hiring and employment. The bill would eliminate all dedicated diversity, equity, and inclusion (DEI) staff positions and offices and end all DEI-related training. It would also prohibit any state agency or unit of local government from using public funds for DEI initiatives, including federal funds. All state agencies and local governmental units would be required to create annual public posts detailing their compliance. Further, the bill would make it a crime to act in any way deemed contrary to promote or support DEI in state and local government.
Workforce Freedom and Protection Act (House Bill 269)
HB 269, named the “Workforce Freedom and Protection Act,” was introduced in the House in March and would prohibit noncompete and nonpoaching agreements in the state. The prohibition against noncompete agreements would apply to employees making less than $75,000 a year and would disallow any agreements restricting the employee’s right to work for another employer for any period of time, work in a specific geographic area, or from engaging in work activities performed for the employer. These restrictions would be in effect as of July 1, 2025, and would ban employers from entering into noncompete agreements as of that date. The bill would also prohibit “non-poaching” agreements, which are agreements between employers that restricts one employer from soliciting, recruiting, or hiring employees from the other employer, or in any way prevents companies from competing against each other for employees.
Allow Public Employee Collective Bargaining (House Bill 256)
HB 256, introduced in the House in February, is the second bill introduced in this session to encourage union activity and collective bargaining. Currently, public employees are prohibited from collective bargaining, but this bill would repeal that law, paving the way for North Carolina government employees to engage in union activity.
Reduce Barriers to State Employment (Senate Bill 124 and House Bill 177)
Another pair of bills, SB 124 and HB 177, specifically directed at state employers, seeks to make state employment opportunities more accessible to individuals without four-year college degrees. Titled “An Act to Reduce Barriers to State Employment,” the legislation would direct the North Carolina State Human Resources Commission to assess the educational and experiential requirements for state positions and identify certain positions to remove the four-year college degree requirement, leaning toward other requirements including military service, apprenticeships, and trade schools where appropriate.
Second Circuit: Rule 37 Sanctions Require ‘Intent to Deprive’ for Lost ESI, Not Mere Negligence
Plaintiff–Appellant Richard Hoffer sued the city of Yonkers, the Yonkers Police Department, and various individual police officers under 42 U.S.C. § 1983, alleging the officers used excessive force when arresting him. After trial, the jury returned a verdict in the officers’ favor. Hoffer appealed the judgment, arguing the district court erred in denying his request for an adverse inference instruction pursuant to Federal Rule of Civil Procedure 37(e)(2), based on a missing video of him being tased. On appeal, the parties disputed the standard applicable to requests for adverse inference instructions under Rule 37(e)(2).
The Second Circuit held that to impose sanctions pursuant to Rule 37(e)(2), a district court or a jury must find, by a preponderance of the evidence, that a party acted with an “intent to deprive” another party of the lost information. Consistent with this holding, the court further held the lesser “culpable state of mind” standard, which includes negligence,[1] was no longer applicable for imposing Rule 37(e)(2) sanctions for lost electronically stored information (ESI).
Hoffer v. City of Yonkers, et al. Background
Plaintiff–appellant commenced a § 1983 suit against the city of Yonkers, the Yonkers Police Department, and various individual police officers alleging, among other things, that the officers used excessive force during his 2016 arrest. A trial was held in 2021 on the claims against the individual police officers (collectively, the officer defendants), where differing accounts of the arrest were offered into evidence. There was no dispute that plaintiff was tased two times. However, each taser generates a log, which reflects each use of the taser. And while the log for the date in issue reflected two deployments, they were hours apart: the first at 4:16 p.m., when the officer tested the taser at the beginning of his shift, and the second at 8:02 p.m., lasting eight seconds, which the officer testified corresponded to the secondtime he tased plaintiff. The log also reflected an event at 10:24 p.m. titled “USB Connected,” that apparently corresponded to the taser syncing to an external device.
There was also testimony that each taser deployment generates a video. However, the testimony established that only video of the second deployment was available because the video of the first deployment “had somehow been overwritten.” No further explanation was provided as to the first video’s absence. Plaintiff’s girlfriend testified that, when she was at the police station after plaintiff’s arrest, she saw one officer holding a USB and saying to another officer: “It shows everything that we did and nothing that he did.”
Plaintiff’s counsel orally requested the district court instruct the jury that it could draw an adverse inference against the officer defendants based on the purported spoliation of the first video. At the charge conference, the district court, after assessing the request under Rule 37(e)(2), declined finding the evidence before it insufficient to establish any defendant “acted with an intent to deprive [Plaintiff] of the use of the video.”
There was no “clear evidence” that the first taser video existed in the first place, speculating that perhaps the first deployment did not trigger a video recording or that the first and second taser deployments happened within the same eight second period the log captured. The court further reasoned that it was not clear what the officer meant when he testified about “something being overwritten,” and nothing in his testimony suggested he had any direct knowledge or experience with the document management system for taser videos or this video specifically. The district court further observed that officer testimony establishing there were two taser deployments and no effort by defendants to “cover up that fact” undercut the theory the video was purposely destroyed. After three days of deliberations, the jury returned a unanimous verdict, finding in the officer defendants’ favor.
Appeal
On appeal, plaintiff-appellant argued that the district court erred by failing to instruct the jury that it could draw an adverse inference based on the purported spoliation of the first taser video. To decide that issue, the court was required to first resolve the parties’ dispute regarding the showing required for an adverse inference instruction under Rule 37(e)(2).[2]
In resolving this issue, the court discussed the history of Rule 37. Specifically, it noted that before 2015, a party seeking an adverse inference instruction based on lost evidence—electronic or otherwise—had to establish that the party obligated to preserve such evidence who failed to do so acted with “a culpable state of mind”[3] (internal quotation marks omitted). At that time, the circuit court held the requirement could be satisfied when a party acted knowingly or negligently. An intentional act was not required to establish a “culpable state of mind.” Then, in 2015, Rule 37(e) was amended to address the measures a court could employ if ESI was wrongfully lost, and the findings required to order such measures. At that time, Rule 37 was split into two subsections. The first allowed a court, upon a finding of prejudice to another party arising from the loss of ESI to order “measures no greater than necessary to cure the prejudice.” The second enumerated certain sanctions the court may impose “only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation.”
The court observed that the Advisory Committee notes to the 2015 Amendment explicitly stated that subdivision (e)(2) rejects cases such as Residential Funding that authorize adverse inference instructions upon a finding of negligence.[4] According to the court, the notes reason that only the intentional loss or destruction of evidence gives rise to an inference that the evidence was unfavorable to the party responsible for that loss or destruction. Negligent—or even grossly negligent—behavior does not logically support that inference.
While plaintiff-appellant correctly noted various circuit decisions after the 2015 Amendment that referenced or used the lesser “culpable state of mind” standard in the context of lost ESI (citing cases), the circuit noted that none of those decisions expressly held that the state of mind required for a sanction under Rule 37(e)(2) could be less than “intent to deprive.” Rather, no decision directly addressed the question before the court: whether the 2015 Amendment abrogated the lesser “culpable state of mind” standard in the context of lost ESI. According to the circuit, “[t]o the extent these decisions implied that a Rule 37(e)(2) sanction could issue upon a finding of a state of mind other than ‘intent to deprive,’ any such implication was mistaken after the 2015 Amendment.”
Conclusion
The Second Circuit has clearly articulated that imposing a sanction under Rule 37(e)(2) requires a finding of “intent to deprive another party of the information’s use in the litigation.” Thus, the 2015 Amendment to Rule 37(e)(2) abrogated the lesser “culpable state of mind” standard used in Residential Funding in the context of lost ESI. “A party’s acting negligently or knowingly will not suffice to justify the sanctions enumerated in Rule 37(e)(2).” Notably, in holding that the requisite state of mind to impose a sanction under Rule 37(e)(2) is “intent to deprive,” the Second Circuit joins the majority of its sister circuits.[5]
[1] see Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 108 (2d Cir. 2002).
[2] The parties also disagreed about whether the requirements of Rule 37(e)(2) must be proven by clear and convincing evidence or by a preponderance of the evidence, and whether the district court erred in resolving factual questions itself, rather than submitting them to the jury. Although the appellate court determined these issues (i.e., by a preponderance of the evidence and there was no error), these issues are not discussed in this blog.
[3] See Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002).
[4] Before the 2015 Amendment, Rule 37(e) provided in full: “Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.” Rule 37(e)(2) advisory committee’s note to 2015 amendment.
[5] See Jones v. Riot Hosp. Grp. LLC, 95 F.4th 730, 735 (9th Cir. 2024); Ford v. Anderson Cnty., Texas, 102 F.4th 292, 323–24 (5th Cir. 2024); Skanska USA Civ. Se. Inc. v. Bagelheads, Inc., 75 F.4th 1290, 1312 (11th Cir. 2023) (specifying that “intent to deprive” means “more than mere negligence”); Wall v. Rasnick, 42 F.4th 214, 222–23 (4th Cir. 2022); Auer v. City of Minot, 896 F.3d 854, 858 (8th Cir. 2018); Applebaum v. Target Corp., 831 F.3d 740, 745 (6th Cir. 2016) (“A showing of negligence or even gross negligence will not do the trick.”).
Federal Court Blocks Trump’s Anti-DEI Executive Orders Nationwide
Overview
Shortly after taking office, President Donald Trump issued two executive orders (EOs) targeting diversity, equity, and inclusion (DEI) programs: EO 14151, “Ending Radical And Wasteful Government DEI Programs and Preferencing,” and EO 14173, “Ending Illegal Discrimination And Restoring Merit-Based Opportunity” (collectively, the anti-DEI EOs).
On February 21, 2025, following a lawsuit filed by the National Association of Diversity Officers in Higher Education and the American Association of University Professors (collectively, the plaintiffs), the US District Court for the District of Maryland granted a motion for preliminary injunction based on First and Fifth Amendment challenges to the anti-DEI EOs. The court’s order prevents certain aspects of the EOs from taking effect nationwide until a final determination is made on the plaintiffs’ constitutional challenge.
In Depth
LEGAL OVERVIEW
The plaintiffs challenged the following three specific provisions in the anti-DEI EOs as being unconstitutional:
Termination Provision: A provision that directed federal agencies to terminate “equity-related” grants or contracts within 60 days.
Certification Provision: A provision that required federal agencies to include a term in contracts and grants requiring federal contractors and grantees to certify that they do not operate any programs promoting DEI that violate federal anti-discrimination laws as a condition of receiving funding.
Enforcement Threat Provision: A provision that directed the attorney general to take measures to deter DEI programs and identify potential civil compliance investigations.
The plaintiffs argued that these provisions collectively violate the First and Fifth Amendments because they are designed to chill viewpoint speech. They also asserted that the provisions are unconstitutionally vague in informing federal contractors that may be exposed to liability under the False Claims Act what their obligations are and how to comply with them.
The court agreed with the plaintiffs, concluding that:
The Certification and Enforcement Threat Provisions likely violate the First Amendment by chilling speech and imposing viewpoint-based restrictions; and
The Termination and Enforcement Threat Provisions are likely unconstitutionally vague, failing to provide clear guidance and inviting arbitrary enforcement.
WHAT COMPANIES SHOULD DO NEXT
While the nationwide injunction pauses some of the more controversial provisions included in the anti-DEI EOs, it is only a preliminary finding, and the Trump administration may take steps to challenge it. Companies should use this time to work with legal counsel to proactively audit their DEI policies to ensure compliance with existing laws while maintaining alignment with company values.
Joseph Anderson, a law clerk in New York office, also contributed to this client alert.
South Carolina House and Senate Introduce Legislation on Diversity, Equity, and Inclusion
State legislators have introduced bills in the South Carolina House of Representatives and South Carolina Senate to amend Title 1, Chapter 1 of the South Carolina Code by adding sections addressing diversity, equity, and inclusion (DEI) for state offices or departments, including all political subdivisions, and institutions of higher learning and school districts.
House Bill 3927 (H. 3927), introduced on February 6, 2025, and Senate Bill 368 (S. 368), introduced on February 20, 2025, are both cited as the “Ending Illegal Discrimination and Restoring Merit-Based Opportunity Act” and use parallel language in seeking to amend the South Carolina Code.
Quick Hits
South Carolina state lawmakers introduced parallel bills in the state House and Senate that follow other recent executive and agency actions at the federal level and offer additional details not present in federal executive orders, such as definitions of “promoting DEI.”
Proposed amendments to the South Carolina Code would require certification of compliance to the General Assembly, as well as require the state auditor to conduct periodic compliance audits.
The bills include several carve-outs, including directly addressing First Amendment protections, which have been raised in several recent lawsuits challenging federal executive orders with similar content.
Defining DEI
On January 21, 2025, President Donald Trump signed Executive Order 14173 (EO 14173), with a nearly identical title as H. 3927 and S. 368—“Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” Unlike EO 14173, H. 3927 and S. 368 offer a definition of DEI at proposed Section 1-1-1910(A). Specifically, “promoting diversity, equity, and inclusion” is identified as “any attempt or effort to”:
(1) influence hiring or employment practices with respect to race, sex, color, ethnicity, gender, or sexual orientation other than through the use of color‑blind and sex‑neutral hiring processes in accordance with any applicable state and federal antidiscrimination laws;
(2) promote differential treatment of or providing special benefits to individuals on the basis of race, sex, color, ethnicity, gender, or sexual orientation;
(3) promote policies or procedures designed or implemented in reference to race, sex, color, ethnicity, gender, or sexual orientation for any purpose other than ensuring compliance with any applicable court order or state or federal law; or
(4) conduct trainings, programs, or activities designed or implemented in reference to race, sex, color, ethnicity, gender, or sexual orientation, other than trainings, programs, or activities developed for the sole purpose of ensuring compliance with any applicable court order or state or federal law.
Notably, both the terms “sex” and “gender” are used, as well as sexual orientation, and the list of characteristics in the definition does not include all categories from Title VII of the Civil Rights Act of 1964, as amended, nor does it address all groups protected in other parts of the South Carolina Code of Laws—such as under the South Carolina Human Affairs Law in Section 1-13-20. Three of the four definitional prongs also reference “applicable state and federal antidiscrimination laws”—these references presumably appear to serve both as a marker of prohibited DEI activities and as the sole allowable purpose for certain activities.
Prohibitions
H. 3927 and S. 368 propose at Section 1-1-1910(B) that “every office, division, or other unit by any name of every office or department of this State, and all of its political subdivisions, including all institutions of higher learning and school districts” be prohibited from:
(1) establishing or maintaining an office or division or other unit by any name whose purpose, in whole or in part, is the promotion of diversity, equity, and inclusion;
(2) hiring or assigning an employee or contracting with a third party to promote diversity, equity, and inclusion;
(3) compelling, requiring, inducing, or soliciting any person to provide a diversity, equity, and inclusion statement or give preferential consideration to any person based on the provision of a diversity, equity, and inclusion statement;
(4) giving preference on the basis of race, sex, color, ethnicity, gender, or sexual orientation to an applicant for employment, an employee, or a participant in any function of the office or department; or
(5) requiring as a condition of enrolling at an institution or performing any institution function any person to participate in diversity, equity, and inclusion training, which:
(a) includes a training, program, or activity designed or implemented in reference to race, sex, color, ethnicity, gender, or sexual orientation; and
(b) does not include a training, program, or activity for the sole purpose of ensuring compliance with any applicable court order or state or federal law.
Proposed Section 1-1-1910(C) would require the adoption of policies and procedures to discipline or dismiss employees or contractors who violate the prohibitions above.
Limitations
H. 3927 and S. 368 specifically note that institutions of higher education or an employee of an institution of higher education are not limited or prohibited, “for purposes of applying for a grant or complying with the terms of accreditation by an accrediting agency,” from providing a statement that highlights the institutions’ work in supporting “first-generation college students,” “low-income students,” or “underserved student populations.” Institutions are also not prohibited from certifying compliance with state or federal anti-discrimination laws.
The bills further address exemptions for institutions of higher learning for academic course instruction, scholarly research or creative work, activities of recognized student organizations, guest speakers or performers on short-term engagements, activities enhancing student academic achievement or postgraduate outcomes not based on race, sex, color, ethnicity, gender, or sexual orientation, and data collection.
Section 4 of H. 3927 and S. 368 explain that lawful state and private-sector employment and contracting preferences are not prohibited for veterans of the U.S. Armed Forces or those protected by the Randolph-Sheppard Act, nor is there any intent to prevent First Amendment of the U.S. Constitution protected speech. The direct carve-out of not seeking to chill First Amendment protected speech is noteworthy as it appears to be designed to avoid First Amendment challenges, which has been included in current lawsuits challenging EO 14173, as well as being one of the bases on which a preliminary injunction of EO 14173 was granted on February 21, 2025.
Certification, Testimony, and Audits
H. 3927 and S. 368 also propose to require certifications, elicit testimony before the General Assembly of certifying officials, and have the state auditor conduct compliance audits.
Proposed Section 1-1-1910(F)(1) prohibits “spending any money appropriated or authorized to the office or department until the governing board or chief executive officers, as applicable, submits to the General Assembly a report certifying compliance with this section during the preceding fiscal year,” while the certifying official may be “required to testify at a public hearing of the committee regarding compliance” pursuant to proposed Section 1-1-1910(F)(2). If enacted, this provision would most certainly place greater pressure on certifying officials.
The state auditor would also be tasked under proposed Sections 1-1-1910(F)(3) and (4) with conducting periodic compliance audits “as to whether the money has been expended in violation of this section.” If violations are found, the audited department or office would have 180 days to cure the violation or risk the state auditor notifying the State Fiscal Accountability Authority—which could potentially lead to the state treasurer withholding future distributions until the alleged violations are cured.
Finally, before any agency, office, division, or other unit contracts with a subcontractor for a state-paid project, the applicable subcontractor or grant recipient would also be required to certify that it does not operate any prohibited DEI programs. This requirement in proposed Section 1-1-1920 has the potential to require certifications across the business community in South Carolina and beyond the state, including potentially having certifications connected to state payments applying to nongovernmental private employers.
Next Steps
Currently, both bills have been referred to committee—H. 3927 referred to the Committee on Education and Public Works on February 6, 2025, and S. 368 referred to the Committee on Judiciary on February 20, 2025. On March 5, 2025, the South Carolina Revenue and Fiscal Affairs Office issued a Statement of Estimated Fiscal Impact related to H. 3927 explaining the fiscal impact of the bill and resources and funds that may be needed to carry out the bill’s objectives.
Republicans hold supermajorities in both the South Carolina Senate and House of Representatives, and the South Carolina governor is also a Republican. This could have an impact on how the proposed bills move through the process and, if passed as written, could have important impacts on South Carolina employers and businesses involved with state work. These bills may also be important for employers in other states as they could further signal a more extensive wave of state-based legislation addressing diversity, equity, and inclusion programs.
The Ever-Evolving Landscape with Artificial Intelligence and Employment
Long before the recent mainstream popularization of ChatGPT and generative Artificial Intelligence (AI) that caught the public eye, private companies – as well as government agencies – had already been quick to incorporate AI tools into their business. From housing to finances to hiring, AI permeated the pores of business because it satisfied the one thing businesses aim to accomplish – maximizing efficiency to increase profit margins. According to a 2023 article from the ACLU, approximately 70% of companies and 99% of Fortune 500 companies had already implemented some form of AI and automation tools to increase “efficiency” in the hiring process. The global market size of the AI recruitment industry was around $618 million as of 2024 and is expected to surge to $1053 million by 2032.
The use of AI in the hiring process can help reduce the workload of recruiters by scanning thousands of resumes and filling positions faster. While in theory this sounds promising, it can lend itself to incidences of various types of illegal discrimination that employers should be aware of in the workplace.
Employment Discrimination and AI.
In 2022 the EEOC filed a case against a Shanghai China-based English language tutor known as iTutor over the company’s use of a software programmed to automatically reject both female candidates over the age of 55 and male candidates over the age of 60 for tutoring roles. EEOC alleged a violation of the Age Discrimination in Employment Act (ADEA). Although the tutors were not considered employees, but instead independent contractors, which is out of the purview of the ADEA, in 2023 the U.S. District Court for the Eastern District of New York ordered iTutor to pay $365,000 to over 200 job candidates who were rejected as a result of automatic screening from iTutor’s employed software. Furthermore, the Court approved the EEOC’s consent decree outlining the required antidiscrimination training iTutor must undergo as a form of injunctive relief.
More recently, 2024, in Mobley v. Workday, Inc. a plaintiff alleged that Workday’s AI screening tools violated federal and California anti-discrimination laws, including Title VII, the Age Discrimination in Employment Act (ADEA), and the Americans with Disabilities Act (ADA). Derek Mobley, an African American man over 40 with anxiety and depression, claimed that Workday’s AI tools rejected his applications to over 100 jobs without a single offer. The Northern District of California allowed the disparate impact discrimination claims to proceed, recognizing Workday as an “agent” of the employers using its AI tools. This case is still pending resolution.
The Tale of Two Administrations
The increased use of AI, as expected, has drawn attention from the federal government, specifically the executive branch. Both the Biden and Trump Administrations have taken keen interest in AI.
On October 30, 2023, President Joe Biden signed Executive Order 14110, titled “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.” This executive order aimed to establish a comprehensive national approach to governing AI technologies. EO 1410’s main goals were to promote competition in the AI industry, prevent AI-enabled threats to civil liberties and national security, and ensure U.S. global competitiveness in AI. The order emphasized the need to govern AI technologies to realize their potential benefits while mitigating associated risks.
In turn, newly elected President Donald Trump on January 23, 2025, signed an EO titled “Removing Barriers to American Leadership in Artificial Intelligence.” In addition to revoking the Biden Administrations EO, this order focuses on removal of federal constraints on AI, encouraging businesses more freedom to innovate. By giving more powers to employers the EO encourages employers to address job security and prioritize upskilling and reskilling their workforces.
In essence, Biden’s order focused on protecting workers and ensuring ethical AI use, while Trump’s order emphasizes deregulation and innovation, placing more responsibility on employers to manage AI’s impact on employment.
The Plan Moving Forward for Employers
Given the developing legal precedents and influence by the executive branch, employers may consider the elimination of AI in the recruitment process created by themselves or third parties. Elimination in its entirety may not be the solution; however, it is essential for key stakeholders and decision makers to understand the data, training methods, and programming used by their vendors and the AI tool developers. Employers must understand the data pool the program has been trained on and what the limitations and exclusions of that data pool are. If there are indications from a vendor that the AI tool will likely exclude applicants of a protected class, the employer should avoid its use entirely to protect itself from litigation.
Employers should also consider auditing AI tools to confirm that the algorithmic screening complies with federal and state discrimination laws, regardless of whether applicable law already requires an audit. Furthermore, employers should assemble a team to oversee the tool’s use for any biases that may become apparent.
Further consideration should be given to protecting businesses from the expected onslaught of litigation challenging AI in employment. This is due to the fact that Trump’s executive order puts the onus on employers to manage AI innovation. Although executive orders are not “the law” per se, they do carry some influence. Such influence may cause employees and applicants to claim discrimination in relation to their employment opportunities.
Consulting an attorney who specializes in employment litigation can provide further guidance on the interplay between AI and employment concerns on your business.
Virginia General Assembly Passes Workplace Violence Prevention Requirements
On March 7, 2025, Virginia’s General Assembly passed House Bill (HB) 1919, requiring by January 1, 2027, any Virginia employer of one hundred or more employees to develop, implement, and maintain a workplace violence policy. The bill is currently awaiting Governor Glenn Youngkin’s signature.
Quick Hits
Virginia’s General Assembly passed a workplace violence bill that would require any workplace violence policy to include a “mechanism for employees to report workplace violence” and measures to protect workplace safety.
The bill, if signed, would require employers to make these plans “tailored and specific to conditions and hazards” at the employer’s workplace and would make it unlawful for employers to discriminate or retaliate against employees who report workplace violence, threats, incidents, or concerns to the employer or the authorities.
The bill is now on the governor’s desk.
If passed, HB 1919 would require any such workplace violence policy to include a “mechanism for employees to report workplace violence” in addition to measures to protect workplace safety. If signed by the governor, the new law would require covered employers to make their workplace violence plans “tailored and specific to conditions and hazards” at the employer’s workplace.
If enacted, the law would require employers in Virginia to explicitly include several layers of implementation controls in their workplace violence policies. Specifically, any policy needs to outline the “procedures and methods for identifying” the individuals responsible for the policy’s implementation. Any policy must also detail how employers will respond to incidents immediately and post-incident investigation procedures.
The largest consideration for employers is the requirement to assess risks of workplace violence and hazards to employees. The bill does not define what this assessment looks like but does require that it be completed to support the specifics of each employer’s jobsite.
Retaliation
If signed, the bill would make it unlawful for employers to discriminate against employees who report workplace violence, threats, incidents, or concerns to the employer or the authorities. Beyond traditional prohibitions on retaliation, HB1919 would explicitly prevent employers from taking any disciplinary actions against employees who report workplace violence incidents “under a policy developed pursuant to § 40.1-51.4:6 or otherwise.”
Documentation and Reporting
If enacted, employers would be required to document all reports of workplace violence incidents, including the responses, investigations, and any corrective measures taken. Under the bill, any documentation would be required to detail the violent incident, including the date, time, and location, as well as the names and job titles of the employees involved. Additionally, it would be required to describe the nature and extent of any injuries and, if applicable, how the incident was resolved. As far as retention, the law would require employers to keep these documents for a minimum of five years and make them available upon request to employees (with personal identifying information omitted) and law enforcement.
Enforcement: Civil Penalties
In the event that employers are found to be noncompliant after the July 1, 2027, deadline, they could potentially be subject to a civil penalty of up to $1,000 per violation.
Beyond the workplace violence requirements in HB1919, employers may also want to be aware of House Bill (HB) 1620, whichwould direct the Virginia Department of Labor and Industry to “convene a work group for the purpose of evaluating the prevalence of workplace violence” in the state. The work group would develop recommendations related to (a) maintaining healthy, safe, and secure work environments; (b) educating employers and employees and communicating to them techniques to effectively handle conflicts in the workplace; and (c) employee support services designed to address workplace violence. Unlike HB1919, this bill is currently tabled in committee but can change the scene about how enforcement might look going forward.
Employers in Virginia will have roughly two years to come into compliance if the bill is signed into law. It may be prudent for employers to start considering abusive conduct and bullying as factors in their workplace evaluations.
Key Takeaways
In 2025, many employers are starting to consider workplace violence incidents in their efforts to maintain workplace safety. Currently, there are no federal requirements related to workplace violence, and several states (including California and Virginia) are leading the charge in creating state-specific requirements. With Virginia’s newly proposed requirements, employers with one hundred or more employees may want to consider planning for a workplace violence plan, including what the program will entail and what workplace-specific hazards they need to consider.