On July 29, 2025, the U.S. Department of Justice (“DOJ”) issued guidance on the application of federal civil rights laws to entities receiving federal funds. The guidance reflects continued focus on programs, policies, and initiatives related to diversity, equity, inclusion, and accessibility (“DEI” or “DEIA”), which we previously discussed here and here. The memo provides specific examples of programs, policies, and initiatives that DOJ has determined violate federal antidiscrimination laws and provides non-binding suggestions to federally funded entities to minimize legal risk.
Department of Justice Memorandum
The memorandum, titled Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination, describes “the significant legal risks of initiatives that involve discrimination based on protected characteristics.” The guidance suggests that the Administration’s enforcement and investigative priorities will aggressively seek to ensure recipients of federal funding comply with its interpretation of federal antidiscrimination law and refrain from “discrimination based on protected characteristics.”
The memorandum provides that, for recipients of federal funds, and for other entities subject to federal antidiscrimination law, including most private-sector employers:
- “Federal law prohibits discrimination based on protected characteristics like race, sex, color, national origin, or religion.”
- “The use of terms such as ‘DEI,’ ‘Equity,’ or other euphemistic terms does not excuse unlawful discrimination or absolve parties from scrutiny regarding potential violations.”
- “Using race, sex, or other protected characteristics for employment, program participation, resource allocation, or other similar activities, opportunities, or benefits, is unlawful, except in rare cases where such discrimination satisfies the relevant level of judicial scrutiny.”
- “Compelling employees to share intimate spaces with the opposite sex or allowing men to compete in women’s athletic competitions would typically be unlawful.”
- “Facially neutral criteria (e.g., ‘cultural competence,’ ‘lived experience,’ geographic targeting) that function as proxies for protected characteristics violate federal law if designed or applied with the intention of advantaging or disadvantaging individuals based on protected characteristics.”
- “Recipients of federal funds should ensure federal funds do not support third-party programs that discriminate.”
- “Individuals who object to or refuse to participate in discriminatory programs, trainings, or policies are protected from adverse actions like termination or exclusion based on that individual’s opposition to those practices.”
The memorandum provides a “non-exhaustive list of unlawful practices that could result in revocation of grant funding.” Though the examples primarily focus on educational institutions, by its own terms, the memorandum is also addressed to “state and local governments, and public and private employers.” Through the guidance, DOJ takes the position that “[f]ederal funding recipients may also be liable for discrimination if they knowingly fund the unlawful practices of contractors, grantees, and other third parties.”
A. Unlawful Preferential Treatment
The memo states that “unlawful preferential treatment” occurs “when a federally funded entity provides opportunities, benefits, or advantages to individuals or groups based on protected characteristics in a way that disadvantages other qualified persons, including such practices portrayed as ‘preferential’ to certain groups,” unless such practices “meet very narrow exceptions.” The guidance sets forth the following examples of unlawful practices of preferential treatment:
- Race-based scholarships or programs, including when “[a] university’s DEI program establishes a scholarship fund exclusively for students of a specific racial group.” The guidance states that unlawful scholarships or programs include “any race-exclusive opportunities, such as internships, mentorship programs, or leadership initiatives that reserve spots for specific racial groups, regardless of intent to promote diversity.”
- Preferential hiring or promotion practices, including when “[a] federally funded entity’s DEI policy prioritizes candidates from ‘underrepresented groups’ for admission, hiring or promotion, [and] bypassing qualified candidates who do not belong to those groups, where the preferred ‘underrepresented groups’ are determined on the basis of a protected characteristic like race.”
- Access to facilities or resources based on race or ethnicity, including when “[a] university’s DEI initiative designates a ‘safe space’ or lounge exclusively for students of a specific racial or ethnic group.”
B. The Prohibited Use of Proxies for Protected Characteristics
DOJ takes the position that the unlawful use of proxies “occur[s] when a federally funded entity intentionally uses ostensibly neutral criteria that function as substitutes for explicit consideration of race, sex, or other protected characteristics.” The guidance articulates the view that these criteria become “legally problematic,” even if facially neutral, when (i) “[t]hey are selected because they correlate with, replicate, or are used as substitutes for protected characteristics”; or (ii) “[t]hey are implemented with the intent to advantage or disadvantage individuals based on protected characteristics.” According to DOJ, examples of potentially unlawful proxies include:
- Cultural competence requirements, including when “[a] federally funded university requires job applicants to demonstrate ‘cultural competence,’ ‘lived experience,’ or ‘cross-cultural skills’ in ways that effectively evaluate candidates’ racial or ethnic backgrounds rather than objective qualifications.”
- Geographic or institutional targeting, including when “[a] federally funded organization implements recruitment strategies targeting specific geographic areas, institutions, or organizations chosen primarily because of their racial or ethnic composition rather than other legitimate factors.”
- Overcoming obstacles narratives or diversity statements, including when “[a] federally funded program requires applicants to describe ‘obstacles they have overcome’ or submit a ‘diversity statement’ in a manner that advantages those who discuss experiences intrinsically tied to protected characteristics.”
C. Unlawful Segregation Based on Protected Characteristics
The DOJ memo provides that “[s]egregation based on protected characteristics occurs when a federally funded entity organizes programs, activities, or resources—such as training sessions—in a way that separates or restricts access based on race, sex, or other protected characteristics.” The guidance states that exceptions include “only cases where federal law expressly permits race-based remedies for specific, documented acts of past discrimination by the institution itself, or in specialized contexts such as correctional facilities where courts have recognized compelling institutional interests.” The guidance sets forth the following examples of unlawful segregation based on protected characteristics:
- Race-based training sessions, including when “[a] federally funded university hosts a DEI training program that requires participants to separate into race-based groups . . . for discussions, prohibiting individuals of other races from participating in specific sessions.”
- Segregation in facilities or resources, including when “[a] college receiving federal funds designates a ‘BIPOC-only study lounge’ . . . [e]ven if access is technically open to all.” The guidance states that the prohibition on segregating access based on protected characteristics “extends to any resource allocation,” although it is not unlawful to maintain “facilities that are single-sex based on biological sex.”
- Implicit segregation through program eligibility, including when “[a] federally funded community organization hosts a DEI-focused workshop series that requires participants to identify with a specific racial or ethnic group . . . or mandates sex-specific eligibility.”
DOJ also takes the position, however, that “failing to maintain sex-separated athletic competitions and intimate spaces can . . . violate federal law.” In particular, the memorandum notes the risk of liability under Title VII and Title IX for federally funded entities that (1) “allow males, including those self-identifying as ‘women,’ to access single-sex spaces designed for females” or (2) permit “males to compete in women’s athletic events.”
D. The Prohibited Use of Protected Characteristics in Candidate Selection
DOJ states that the “[u]nlawful use of protected characteristics occurs when a federally funded entity or program considers race, sex, or any other protected trait as a basis for selecting candidates for employment (e.g., hiring, promotions), contracts (e.g., vendor agreements), or program participation (e.g., internships, admissions, scholarships, training).” The prohibition extends to “policies that explicitly mandate representation of specific groups in candidate pools or implicitly prioritize protected characteristics through selection criteria, such as ‘diverse slate’ requirements, diversity decision-making panels, or diversity-focused evaluations” as well as to “requirements that contracting entities utilize a specific level of working hours from individuals of certain protected characteristics to complete the contract.” The guidance sets forth the following examples of the unlawful use of protected characteristics in candidate selection:
- Race-based ‘diverse slate’ policies in hiring, including when “[a] federally funded research institute adopts a policy requiring that all interview slates for faculty positions include a minimum number of candidates from specific racial groups.” The guidance notes that a policy would be unlawful if it “sets racial benchmarks or mandates demographic representation in candidate pools, such as requiring a certain percentage of finalists to be from ‘diverse’ backgrounds.”
- Sex-based selection for contracts, including when “[a] federally funded state agency implements a DEI policy that prioritizes awarding contracts to women-owned businesses.” The guidance covers “any contract selection process that uses sex or race as a tiebreaker or primary criterion, such as policies favoring ‘minority- or women-owned’ businesses without satisfying the appropriate level of judicial scrutiny.”
- Race- or sex-based program participation, including when “[a] federally funded university’s internship program requires that 50% of selected participants be from ‘underrepresented racial groups’ or female students” and extending to “any program—such as scholarships, fellowships, or leadership initiatives—that uses race, sex, or any other protected characteristic as a selection criterion, even if framed as addressing underrepresentation.”
E. Unlawful DEI Training Programs
DOJ defines unlawful DEI training programs as “those that—through their content, structure, or implementation—stereotype, exclude, or disadvantage individuals based on protected characteristics or create a hostile environment.” It calls out trainings that “[e]xclude[] or penalize[] individuals based on protected characteristics” and those that “create[] an objectively hostile environment through severe or pervasive use of presentations, videos, and other workplace training materials that single out, demean, or stereotype individuals based on protected characteristics.” The guidance also provides an example of an unlawful DEI training program where “[a] federally funded school district requires teachers to complete a DEI training that includes statements stereotyping individuals based on protected characteristics—such as ‘all white people are inherently privileged,’ ‘toxic masculinity,’ etc.” However, the memorandum states in a footnote that “workplace harassment trainings that are focused on preventing unlawful workplace discrimination and that do not single out particular groups as inherently racist or sexist” do not violate federal antidiscrimination law.
F. Recommendations on Best Practices
The DOJ memorandum provides “Recommendations on Best Practices,” which the memorandum makes clear “are not mandatory requirements but rather practical recommendations to minimize the risk of violations.” Those recommendations include:
- Ensuring inclusive access.
- Focusing on skills and qualifications.
- Prohibiting demographic-driven criteria.
- Documenting legitimate rationales.
- Scrutinizing neutral criteria for proxy effects.
- Eliminating diversity quotas.
- Avoiding exclusionary training programs.
- Including nondiscrimination clauses in contracts to third parties and monitoring compliance.
- Establishing clear anti-retaliation procedures and creating safe reporting mechanisms.
Takeaways
The DOJ memorandum provides additional insight into the Administration’s enforcement and investigatory priorities. It continues to highlight DOJ’s emphasis on eliminating DEI practices it views as unlawful, and the potential for civil liability for private sector entities that continue to employ such practices. The guidance offers concrete examples of programs, policies, and initiatives that the DOJ has determined violate federal antidiscrimination laws, and makes recommendations for employers with respect to specific DEI practices. Private sector employers should continue to examine their DEI programs in light of these examples and best practices recommendations, and continue to carefully monitor the changing political, legal, and industry landscape.