Employers committed to diversity, equity, and inclusion (DEI) programs have spent recent years navigating a hostile enforcement environment. Executive orders threatening broad enforcement action, expansive EEOC investigations, DOJ guidance introducing novel liability theories, and state legislation targeting DEI training have collectively created a climate of significant legal uncertainty.

Even against this backdrop, three recent legal developments offer meaningful encouragement for employers wishing to continue DEI initiatives. Courts and the federal government have begun to draw constitutional and legal limits around aggressive anti-DEI enforcement positions. While the compliance guidance we have previously provided remains relevant, the judicial record has shifted in ways that private employers should understand.

This article examines each of the three developments and confirms that legally structured DEI programs remain lawful.

Government Admissions Narrow the Reach of the Trump DEI Executive Orders

Two executive orders signed in January 2025, Executive Order 14151 (E.O. 14151), entitled “Ending Radical Government DEI Programs and Preferencing,” and Executive Order 14173 (E.O. 14173), entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” generated significant concern among private employers. The Trump Administration’s rhetoric surrounding the orders, including public statements by cabinet officials such as the declaration that “DEI is dead” at certain federal agencies, reinforced a widespread perception that the orders imposed a sweeping prohibition on a broad range of DEI activity across the private sector.

In early 2025, a coalition of plaintiffs—including the City of Baltimore, the National Association of Diversity Officers in Higher Education (NADOHE), and the American Association of University Professors (AAUP)—filed suit challenging both orders on First and Fifth Amendment grounds. A federal district court initially granted a preliminary injunction blocking key provisions. The Fourth Circuit later vacated that injunction, but in doing so it relied heavily on the government’s own representations about the narrow scope of the orders. In June 2026, the plaintiffs voluntarily dismissed the lawsuit, stating that the government had confirmed to the Fourth Circuit that the Executive Orders “represent a much narrower exercise of power than the Administration’s rhetoric surrounding them reflected.”

The government represented to the court that the Termination Provision, the directive in E.O. 14151 requiring federal agencies to terminate DEI-related grants and contracts, “is not a law, and it does not prohibit private conduct.” It acknowledged that “of course the label [DEI] doesn’t make [conduct] unlawful,” and that it would be “unreasonable” to think that “the government’s going to come after anything labeled DEI and say it’s illegal.” The government conceded that there is “absolutely DEI activity that falls comfortably within the confines of the law.”

The government further conceded that the Certification Provision, the requirement in E.O. 14173 that federal grant and contract recipients certify compliance with antidiscrimination law, does not impose a new requirement on recipients. Rather, it merely requests that recipients certify that they are honoring their existing obligations under anti-discrimination laws. Notably, the government added that any good-faith uncertainty about the meaning of federal anti-discrimination laws would be a complete defense to any False Claims Act action.

The Fourth Circuit’s earlier ruling vacating the injunction in this case effectively confirmed this narrow reading. Chief Judge Diaz noted in concurrence that the orders “do not purport to establish the illegality of all efforts to advance diversity, equity, or inclusion, and they should not be so understood.” Judge Harris similarly recognized that those “who work to promote diversity, equity, and inclusion deserve praise, not opprobrium.”

These government representations are now part of the judicial record. They significantly constrain the government’s ability to take enforcement positions inconsistent with those statements narrowing the scope of the Executive Orders. For employers who have been concerned that any program using the word “DEI” could trigger investigation or False Claims Act liability, the government’s own words provide meaningful reassurance.

Eleventh Circuit Affirms First Amendment Limits on Florida’s Stop WOKE Act

Florida’s Individual Freedom Act, commonly known as the “Stop WOKE Act,” restricts certain training and instruction relating to race, sex, and national origin in both private workplaces and public universities. The Eleventh Circuit struck down the private employer provision in Honeyfund.com Inc. v. Governor of Florida (2024), holding it constituted unconstitutional viewpoint discrimination. In July of this year, The Eleventh Circuit extended that reasoning in Pernell v. Florida Board of Governors (2026), affirming a preliminary injunction against enforcement of the Act as applied to public university faculty.

The majority opinion in Pernell, authored by Judge Grant, flatly rejected Florida’s argument that because the state pays a professor’s salary, it may control every word that a professor speaks in the classroom. The majority was pointed in its assessment: “Florida’s salary-for-speech rule is a breathtaking assertion of power to ban unpopular ideas from public discourse in the very places the State’s own statutes recognize as centers of inquiry.”

The Pernell decision is expressly limited to the postsecondary education context and is a preliminary injunction ruling, not a final merits determination. However, together with Honeyfund, it leaves the Stop WOKE Act enjoined in both private workplaces and public universities. For private employers in Florida and elsewhere, this pairing reinforces that content-based restrictions on workplace training and instruction face meaningful constitutional limits.

Federal Courts Block DOGE’s Termination of DEI-Related Grants as Unconstitutional

For recipients of federal grant funding, the past few years have brought significant disruption. Much of this was directed by the Department of Government Efficiency (DOGE), which drove targeted reviews of grants for perceived DEI connections. Two courts have now pushed back decisively.

In Thakur v. Trump (2026), the Ninth Circuit affirmed a preliminary injunction reinstating terminated research grants for a class of University of California researchers whose grants had been terminated because of their perceived connection to DEI viewpoints. The panel held that selecting grants for termination based solely on recipients’ perceived association with DEI-related viewpoints constituted unconstitutional viewpoint discrimination under the First Amendment.

In ACLS v. McDonald (2026), the Southern District of New York granted summary judgment to plaintiffs on comparable claims arising from the National Endowment for the Humanities (NEH) and its mass termination of more than 1,400 grants. The court sharply criticized DOGE’s use of ChatGPT to classify grants for termination, given the arbitrary AI results. For example, a project examining the history of government-run boarding schools for Native American children was flagged as DEI-related, a project on graphic narratives by Jewish women survivors of Nazi persecution was classified based on its “Jewish” and “women” focus, and a grant focused on Chinese-American veterans was terminated while a parallel grant on veterans generally was retained. The court held these terminations were “textbook examples” of unconstitutional viewpoint discrimination under the First Amendment and also found violations of the Fifth Amendment’s Equal Protection Clause.

Both Thakur and ACLS arose in the specific context of federal grant funding, which implicates First Amendment protections that do not apply identically to all private employers. Nonetheless, they reflect a growing body of judicial precedent establishing that the government cannot terminate funding to punish recipients for their perceived association with DEI-related viewpoints. For federal contractors and grant recipients in particular, these decisions offer meaningful legal support when challenging terminations that appear motivated by viewpoint rather than performance or eligibility.

What Employers Should Take Away

These recent developments are meaningful, but they do not signal a reversal of the enforcement climate. The EEOC’s investigation of Nike and other large employers as well as the DOJ’s Civil Rights Fraud Initiative remain active. State attorneys general in Texas and other jurisdictions retain an aggressive posture toward corporate DEI programs, with active investigations and demands for information directed at publicly traded companies. And the underlying legal risk for programs that cross the line into explicit DEI-based preferences remains.

However, these developments do confirm that, despite recent Trump Administration rhetoric around DEI programs, the law has not fundamentally changed. Legally structured programs— inclusive recruiting practices, broadly available employee resource groups, skills-based mentorship programs, and anti-bias training that does not single out particular groups as responsible for historical inequities—remain lawful. Federal courts are enforcing constitutional limits on the government’s ability to terminate funding or restrict speech based on perceived connection to DEI viewpoints. And the government’s concessions that the law has not changed—and that good-faith uncertainty about anti-discrimination law is a strong defense to False Claims Act liability—provide protection for federal contractors and grant recipients.

The compliance posture we have consistently recommended remains the right approach. Employers should tighten documentation, focus on job-related criteria, structure programs to be inclusive and available to all, and conduct privileged self-audits. Employers who paused or scaled back legally structured DEI programs in response to enforcement concerns may also consider revisiting those decisions in light of the judicial and governmental developments described above.

As we have counseled in prior client alerts, employers should operate consistent with the following guidelines:

• Review Existing DEI Initiatives: Evaluate any current DEI programs to ensure they do not violate federal civil rights laws. Focus on initiatives that promote inclusion without implementing discriminatory practices.
• Adopt a Broad Definition of Diversity: Consider diversity in terms of various characteristics, including age, veteran status, and life experience, not just race or gender.
• Adopt Inclusive Hiring Practices: Remove barriers in hiring processes and ensure equal treatment of all applicants.
• Support Employee Engagement: Develop mentorship programs open to all employees, and support Employee Resource Groups consistent with state and federal law.
• Avoid Quotas: Instead of setting quotas or percentage targets, aim to enhance workforce diversity more broadly.
• Training and Awareness: Continue offering training on bias, anti-discrimination, and cultural competency, but avoid mandatory training where certain groups of employees are singled out as responsible for historical inequities.
• Consistent Messaging: Carefully review DEI-related communications and seek support from legal counsel where appropriate.
• Address Complaints in Good Faith: Investigate all discrimination complaints thoroughly, including those brought by individuals who may not belong to historically underrepresented populations.
• Stay Informed: Keep up legal developments related to DEI to ensure ongoing compliance.

This is a rapidly evolving area of law. Husch Blackwell is closely monitoring related legal and regulatory developments and will issue additional updates as courts and agencies continue to act. If you have questions about how your organization’s DEI programs are positioned in light of these developments, please contact Erik Eisenmann, Sarah Vincent, or your Husch Blackwell attorney.

Written with the assistance of Abby Zumbrunnen, a summer associate in Husch Blackwell’s Milwaukee office.