Judge Lets DEI Executive Order Stand for Now

A federal judge on Wednesday declined to block the DEI executive order targeting diversity, equity and inclusion initiatives by companies that do business with the United States government. US District Judge Adam Abelson in Baltimore, Maryland, said groups representing university faculty and minority business owners had failed to show that the March order by President Donald Trump was too broad. The ruling keeps the order in force while the underlying lawsuit moves forward.

The DEI executive order at issue is EO 14398, titled Addressing DEI Discrimination by Federal Contractors and issued March 26, 2026. It directs executive departments and agencies to include a clause in contracts and subcontracts stating that the contractor will not engage in any racially discriminatory DEI activities, defined as disparate treatment based on race or ethnicity in recruitment, employment, contracting, program participation or allocation of resources. Noncompliance may lead to contract cancellation, termination or suspension and ineligibility for future government contracts, and the order directs the attorney general to consider False Claims Act actions against violators.

The challenge was brought by the National Association of Diversity Officers in Higher Education and four other organizations, three representing higher education employees and two trade associations of construction contractors. Represented by the progressive legal group Democracy Forward, they sought to block EO 14398 and an April 17, 2026, memorandum from the Federal Acquisition Regulatory Council implementing it. The council's memo required agencies to modify existing contracts by July 24, 2026, with model language matching the order.

What the DEI executive order requires

The DEI executive order requires federal contractors to certify in writing that they will not engage in racially discriminatory DEI activities. The ban covers disparate treatment based on race or ethnicity across hiring, employment, contracting, program participation and the use of resources. Companies that do not comply could lose their contracts and face investigation under the False Claims Act, which allows the government to pursue triple damages for fraud against federal programs. The government later agreed not to initiate False Claims Act enforcement related to the order until August 7, 2026.

The plaintiffs argued the DEI executive order wrongly presumes that all DEI amounts to illegal racial discrimination and reaches speech protected by the Constitution. They said the vague phrase racially discriminatory DEI activities could chill lawful diversity programs, training and discussions of race. Companies, they warned, would overcorrect to avoid losing government business, abandoning even plainly legal inclusion efforts.

Why the court upheld the DEI executive order

Judge Adam Abelson rejected those arguments by reading the order narrowly. The court found the groups were unlikely to succeed on their First Amendment and Fifth Amendment claims because the order defines the prohibited activities as disparate treatment based on race or ethnicity, which is intentional discrimination that federal law already prohibits. The Contractors Order only prohibits contractors from engaging in conduct that is already prohibited by federal law, the judge wrote, meaning it reaches no further than existing anti-discrimination rules.

The court also limited the DEI executive order's scope to the work performed under covered contracts. Abelson, an appointee of President Joe Biden, noted that enforcement against lawful DEI-related speech or programs could still be challenged as applied in a future case. The narrow reading addresses concerns that the order could impose obligations beyond existing law, while leaving the door open for contractors to contest specific enforcement actions they consider unconstitutional.

What the DEI executive order ruling means

For companies doing government work, the ruling brings clarity and caution in equal measure. Democracy Forward said the decision would be reassuring for federal contractors because it made clear that the order does not broadly prohibit diversity programs. The group also noted that the court confirmed the order reaches no further than the work a contractor performs for the government on the specific contract where the language appears. Lawful DEI efforts outside that scope, such as research, training and discussions of historic disparities, remain permissible.

The lawsuit itself continues, and the judge's denial of a preliminary block does not decide the final outcome. But the ruling signals how courts may treat the administration's broader campaign against DEI programs in contracting. The DEI executive order stays in effect, contractors must keep certifying compliance, and the fight over where lawful diversity work ends and unlawful discrimination begins will play out contract by contract.