Here’s the intro from this Cooley Alert penned by MaryBeth Shreiner, Selin Akkan, David Fletcher, Beth Sasfai, Vince Sampson, Emily Mok, Shamis Beckley, and Anna Matsuo:
“On March 26, 2026, President Donald Trump issued Executive Order No. 14398 (EO) targeting DEI activities by federal contractors and subcontractors. The EO, titled “Addressing DEI Discrimination by Federal Contractors,” highlights the administration’s belief that some entities, including federal contractors, continue their discriminatory practices through “diversity, equity, and inclusion” (DEI) activities that are sometimes concealed from public view.
To address this, the EO requires federal departments and agencies to add a new, DEI-specific clause to contracts and “contract-like instruments” through which contractors and subcontractors would pledge not to “engage in any racially discriminatory DEI activities” and would agree to “furnish all information and reports, including providing access to books, records, and accounts, as required by the contracting agency … for purposes of ascertaining compliance with [the new] clause.”
Notably, the EO focuses only on “racially discriminatory DEI,” or disparate treatment based only on race and ethnicity, and it does not include other categories protected under federal law, such as sex or gender, which is a departure from the administration’s January 21, 2025, Executive Order No. 14173, which was broader than race-based DEI. However, the EO’s narrowed approach is consistent with the General Services Administration’s recently proposed DEI certification requirement (GSA requirement) for federal financial assistance recipients, which directs recipients to certify compliance with laws prohibiting race and color discrimination, but notably omits sex and other protected categories.
While ethnicity and color are two legally distinct protected characteristics, the EO and GSA requirement interestingly take differing approaches on whether to cover each such characteristic, while both address race.
On April 20, 2026, in Nat’l Ass’n of Diversity Officers in Higher Educ. v. Trump, No. 8:26-cv-01532, (D. Md. filed Apr. 20, 2026), five organizations composed of membership organizations and nonprofit trade associations challenged the EO in the US District Court for the District of Maryland. Among other things, the complaint alleges that the EO’s requirement that federal contractors certify that they will not engage in “racially discriminatory DEI activities,” regardless of whether those activities comply with federal antidiscrimination law or are discriminatory, violates the First Amendment.
The plaintiffs seek an injunction enjoining enforcement and implementation of the EO, striking any contract language implementing the EO that has been inserted into any federal contract or contract-like instrument, and rescinding any agency implementation directives relating to the EO. While employers should track this and any other legal challenge to the EO, they should continue to prepare to comply with the order until a court rules otherwise.”
Authored by
Broc Romanek