California Court’s Nationwide Injunction Halts President Trump’s Diversity Training Ban for Contractors and Grant Recipients

FULL ALERT

A California District Court issued a nationwide preliminary injunction, preventing the government from enforcing portions of President Trump’s Executive Order on Combatting Race and Sex Stereotyping, which barred federal contractors and grant recipients from providing certain diversity and implicit bias training. The plaintiffs, representing several nonprofit organizations and consultants serving and advocating on behalf of the LGBTQI+ community, sought to block the government from enforcing the Executive Order, arguing that it: 1) impermissibly chilled the exercise of free speech based on the content and viewpoint of their speech, violating the First Amendment; and 2) violated the organizations’ right to due process “because it infringes on Plaintiffs’ constitutionally protected right to free speech and provides inadequate notice of the conduct it purports to prohibit.”

As we previously reported in our September 2020 alert, President Trump issued the Executive Order prohibiting federal contractors and grant recipients from certain anti-bias employee training practices. Federal agencies quickly developed enforcement mechanisms and issued guidance to further the stated goals outlined in the Executive Order. For example, the Office of Federal Contract Compliance Programs (OFCCP) in the U.S. Department of Labor (DOL) created a complaint hotline for “reporting race and sex stereotyping and scapegoating.” Additionally, on September 28, the Office of Management and Budget issued a memorandum calling on agencies to review their contracts, and recommended keyword searches for terms such as “white privilege,” “intersectionality,” and “systemic racism” to identify trainings that may run afoul of the Executive Order. 

The Executive Order and agency guidance created confusion for many organizations. They included nonprofits, like the plaintiffs, that focus on equity and educational institutions that receive federal funds, which may have curricula that include topics of diversity, equity, and inclusion.

Addressing the plaintiffs’ First Amendment claim, the district court held that restricting contractors and grantees from delivering programming deemed necessary to train their employees or communities on matters that may have nothing to do with the contract or grant program is likely overreaching, and violates the organizations’ free speech rights. 

Next, upon review of the plaintiffs’ due process claim, the court highlighted that the Executive Order and corresponding FAQs provide that implicit bias training is prohibited if it teaches or implies that individuals are inherently racist, sexist, or biased—yet, trainings that are designed to merely inform workers about offensive stereotypes are permitted. The court explained that the line between teaching and informing is “murky,” and that “this lack of clarity may operate to inhibit the exercise of freedom of expression because individuals will not know whether the ordinance allows their conduct, and may choose not to exercise their rights for fear of being punished.”

Ultimately, the court issued a “narrow injunction” in favor of the plaintiffs, holding that “preventing violation of their constitutional rights under Sections 4 and 5 of the Executive Order (applicable to federal government contractors and grantees, respectively), outweighs the legitimate competing interests raised by the Government.”

However, the injunction does not affect the diversity training ban for the military and federal workforce (Section 3 and 6 of the Executive Order). It provides relief for contractors and grant recipients who, in light of the Executive Order, were unsure how or if they could continue providing diversity, equity, and inclusion training to their staff and clients. 

The court’s December 22 decision may signal the beginning of the end for President Trump’s Executive Order. Racial equity in management, training, and education is a signature part of the Biden-Harris administration’s transition plan, and President-elect Biden is expected to rescind the Order. Under a Biden administration, it is also unlikely that the OFCCP will continue its focus on reviewing diverse hiring programs for potential reverse discrimination (we previously covered in our October 2020 alert.      

Attorneys in Ballard Spahr’s Labor and Employment Group regularly advise and represent public and private employers on anti-discrimination and compliance issues, including keeping clients informed of pending and current legislation and legal trends. The Diversity and Inclusion Counseling Team advises employers in a range of industries on the development, enhancement, and implementation of their diversity, equity, and inclusion programs.

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