On April 20, 2026, a coalition of higher education/academic and minority trade associations filed a lawsuit in the U.S. District Court for the District of Maryland challenging President Donald Trump’s recent executive order that attaches direct contractual consequences to diversity, equity, and inclusion (DEI). The lawsuit alleges the executive order is unconstitutional under the First Amendment of the U.S. Constitution and imposes prohibitions lacking lawful authority.
Quick Hits
- A coalition of higher education/academic and minority trade associations has filed a lawsuit against President Trump’s executive order on DEI initiatives that imposes contractual consequences on federal contractors and subcontractors.
- The lawsuit alleges that Executive Order (EO) 14398 unlawfully equates DEI with racial discrimination and violates the First Amendment by chilling speech and association on matters of race and diversity.
- The plaintiffs contend EO 14398 is overly broad and unconstitutional, threatening the viability of their missions by compelling compliance through the risk of losing federal contracts.
Led by the National Association of Diversity Officers in Higher Education (NADOHE), the lawsuit names President Trump and more than a dozen federal agencies and their heads, seeking to enjoin enforcement of EO 14398, issued on March 26, 2026, titled “Addressing DEI Discrimination by Federal Contractors.”
The associations’ suit alleges EO 14398 unlawfully equates “DEI” with “racial discrimination” by requiring agencies, within thirty days of March 26, 2026, to insert a mandatory clause, which the complaint labels the “Diversity Ban” into “contracts and contract-like instruments,” including lower-tier subcontracts. Noncompliance risks include contract cancellation, termination, or suspension, and ineligibility for future government contracts and potential liability under the False Claims Act (FCA).
Challenged Executive Order: EO 14398
EO 14398 prohibits contractors from engaging in “racially discriminatory DEI activities,” defined in the executive order as “disparate treatment based on race or ethnicity in the recruitment, employment (e.g., hiring promotions), contracting (e.g., vendor agreements), program participation, or allocation or deployment of an entity’s resources.”
The executive order narrows its scope to race and ethnicity and expressly defines “racially discriminatory DEI activities,” unlike past broader references to “unlawful DEI.” EO 14298 defines “program participation” to include “membership or participation in, or access or admission to: training, mentoring, or leadership development programs; educational opportunities; clubs; associations; or similar opportunities” sponsored or established by a contractor or subcontractor. The executive order targets disparate treatment based on race or ethnicity and does not on its face extend to sex- or gender-based practices, nor to disparate impact theories.
EO 14398 is one of several executive orders issued by the Trump administration restricting DEI programs and practices by federal contractors, but it notably departs from prior executive orders by providing an express definition of “racially discriminatory DEI activities.” EO 14398 also includes the latest version of the administration’s certification provision, stating that the contractor recognizes “compliance with the requirements of this clause are material to the Government’s payment decisions for purposes of section 3729(b)(4) of title 31, United States Code” (False Claims Act).”
The clause also requires contractors to provide access to books, records, and accounts for compliance review, to report any known or reasonably knowable subcontractor noncompliance, and to notify the agency if a subcontractor sues and “puts at issue” the validity of the clause.
Separate from the contract clause, EO 14398 directs the Office of Management and Budget (OMB) to issue guidance, and tasks OMB, the U.S. Equal Employment Opportunity Commission (EEOC), and the U.S. Department of Justice (DOJ) with identifying higher‑risk sectors for targeted oversight, and instructs agencies to cancel, terminate, suspend, or refer for suspension or debarment where contractors or subcontractors fail to comply.
EO 14398 requires the Federal Acquisition Regulatory Council (FAR Counci) to amend the Federal Acquisition Regulation (FAR) and, within sixty days, issue deviation/interim guidance to facilitate immediate implementation. On April 17, 2026, the FAR Council issued the anticipated guidance in a memorandum, setting forth an aggressive timeline for implementation.
Legal Grounds Challenging the Executive Order
At the core of the associations’ lawsuit is the allegation that the EO “asserts a legal and moral premise that is fundamentally flawed,” incorrectly claiming that DEI in and of itself is illegal and discriminatory. The associations allege that despite the EO’s efforts to define “unlawful DEI,” EO 14398 is still “overbroad and imprecise” and would broadly and unconstitutionally prohibit activities and practices many see as a competitive advantage and other activities protected by the First Amendment.
These prohibitions threaten the missions, the work, and the long-term viability of the plaintiff organizations, the complaint alleges. Absent an injunction, federal contractors and subcontractors “will be forced to choose between chilling their constitutionally protected expression and risking the loss of federal funds or even criminal prosecution,” the complaint alleges.
Alleged First Amendment Violations and Ultra Vires
The lawsuit brings three counts:
First Amendment—Free Speech and Free Association
The associations allege EO 14398 violates the First Amendment by chilling constitutionally protected speech and association on matters of race, ethnicity, diversity, equity, and inclusion. Also, they allege EO 14398 is unconstitutionally overbroad because it sweeps in substantial amounts of protected expression—including lawful discussions of race, academic research, mentorship programs, and professional associations—and deters such expression through threats of contract loss and penalties.
First Amendment—Content-Based Restrictions
The associations allege EO 14398 imposes content-based discrimination because it “discriminates against speech and association that relates to race, ethnicity, diversity, equity, and inclusion” while not restricting other expression, and “unlawfully coerces contractors to suppress and punish subcontractors’ speech and association.” They further allege EO 14398 imposes an unconstitutional condition, requiring the associations to “chill their own protected speech and association” or forgo needed federal contracts.
Ultra Vires
The NADOHE and the two minority trade associations allege the FCA certification provision of the EO 14398 exceeds the president’s authority and has “[n]o source of law.” Additionally, the associations allege there is no “close nexus” between threatening FCA liability and the Procurement Act’s purpose of promoting efficient government procurement.
Next Steps
The new lawsuit over EO 14398 is the latest challenge to the Trump administration’s executive orders seeking to eliminate DEI in federal contractors and other employers, which have had varying results. In February 2026, the U.S. Court of Appeals for the Fourth Circuit vacated a preliminary injunction against earlier executive orders after focusing on certification text requiring compliance with applicable federal antidiscrimination laws, noting that if officials misinterpret those laws to punish lawful expression, plaintiffs may bring as‑applied challenges. That decision did not validate the administration’s broader enforcement practices or its interpretation of federal antidiscrimination law.
The latest lawsuit sets up what is likely to be more litigation and potential court orders halting the enforcement of EO 14398. The lawsuit asks the court to declare the order unlawful and unconstitutional and to enjoin federal agencies (not the president) from implementing or enforcing it. It also pleads an ultra vires claim that EO 14398’s FCA “materiality” clause (Section 3(6)) exceeds presidential authority under the Procurement Act. Employers may wish to track this and other ensuing challenges, as well as further government activity on the executive order(s).
