US judge says Labor Department can't ban DEI by contractors, for now

By Daniel Wiessner

April 15 (Reuters) - A federal judge has extended an earlier ruling barring the U.S. Department of Labor from requiring contractors and grant recipients to cease diversity, equity and inclusion programs at the direction of President Donald Trump.

U.S. District Judge Matthew Kennelly in Chicago on Monday agreed with Chicago Women in Trades (CWIT), a nonprofit that provides job training to women, that requiring contractors to certify that they do not operate DEI programs likely violates their free-speech rights under the U.S. Constitution.

Trump in January had issued a series of executive orders aimed at curbing diversity programs, including a ban on federal contractors having them.

"Although the government emphasized, both in its briefing and at oral argument, that the certification provision implicates only illegal DEI programs, it has studiously declined to shed any light on what this means. The answer is anything but obvious," Kennelly wrote.

He also barred the Labor Department from cutting off any grants to CWIT on the basis of a separate January order by Trump directing federal agencies to terminate "equity-related grants." The judge, however, declined to extend that ruling nationwide, as had been requested by the group.

Kennelly had already issued a temporary restraining order on March 27, but Monday's ruling will be in place pending the outcome of CWIT's lawsuit, which could take months or longer to resolve.

The Labor Department and the National Women's Law Center, which represents CWIT, did not immediately respond to requests for comment on Tuesday.

The orders are part of Trump's larger efforts to eradicate DEI initiatives, which he and other critics say are discriminatory, from the government and the private sector.

Last week, five large law firms entered into an agreement with Trump not to engage in "illegal DEI discrimination" and each pledged $100 million or more in pro bono legal work to causes supported by the administration.

CWIT's lawsuit is one of several legal challenges to aspects of Trump's DEI orders. The Virginia-based 4th U.S. Circuit Court of Appeals last month paused, pending an appeal, a judge's ruling which blocked the Trump administration from banning DEI programs at federal agencies and businesses with government contracts.

In a letter first seen exclusively by Reuters, a group of former Labor Department officials who served under Democratic presidents, on Tuesday urged federal contractors to maintain DEI policies in the face of legal threats by the Trump administration. Many diversity policies have been upheld in court, and Trump cannot change laws set by Congress through an executive order, they said.

Monday's ruling by Kennelly, an appointee of Democratic President Bill Clinton, largely mirrored the temporary restraining order he issued in March. But in a reversal, he said that CWIT was unlikely to prevail on its claim that terminating "equity-related grants" violates recipients' free-speech rights.

On further review, he said, that order reflects a funding decision rather than regulation based on speech. But he separately found that it likely violates Congress' power to appropriate federal funds.

Kennelly declined to extend that portion of the order nationwide, as CWIT had requested. The judge said nationwide orders are appropriate only in rare circumstances as they can encourage plaintiffs to seek out favorable jurisdictions to bring their cases.

The Trump administration and other Republican officials have said that nationwide orders from judges improperly limit the president's powers.

The case is Chicago Women in Trades v. Trump, U.S. District Court for the Northern District of Illinois, No. 1:25-cv-2005.

For CWIT: Adrienne DerVartanian and Elizabeth Theran of the National Women's Law Center

For the government: Pardis Gheibi of the U.S. Department of Justice

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