Entities receiving federal funds, including educational institutions, state and local governments, and public and private employers, must ensure that their programs and activities comply with federal law and do not discriminate based on race, color, national origin, sex, religion, or other protected characteristics, according to the latest guidance issued by the Department of Justice.
On July 29, 2025, the Justice Department issued a memorandum to all federal agencies entitled "Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination." The Guidance is intended to offer non-binding guidance to federal contractors, grant recipients, and others receiving federal funds about the Administration's views of lawful and unlawful diversity, equity, and inclusion (DEI).
The Guidance lists certain DEI policies and practices that Justice views as violative of federal antidiscrimination laws, unless they meet the strict and very narrowly defined legal standards required for protected-class conscious programs. These include:
- Scholarships, Internships, Mentorship Programs, and Leadership Initiatives. Establishing these programsexclusively for a specific protected class, to the exclusion of others; consideration of protected class in selecting program participants; setting aside a percentage of participants for a protected class, even if framed as addressing under-representation.
- Preferential Hiring or Promotion Practices. Prioritizing candidates from "under-represented groups" for hiring or promotion where other qualified candidates from outside those groups are bypassed. Criteria like socio-economic status, first-generation status, or geographic diversity cannot be used to prioritize individuals based on protected class.
- Access to Facilities or Resources. Creating a "safe space" exclusively for people of a particular protected class, including any resource allocation related to event venues (e.g., a BIPOC-only study lounge at a university). Even if access is "technically open to all," the identity-based focus may create the perception of segregation.
- Recruitment Strategies.Targeting specific geographic areas, institutions, or organizations for recruiting because of their racial or ethnic composition.
- Sex-Separated Intimate Spaces. Failing to safeguard the rights of women and girls by affirming sex-based boundaries routed in biological differences, such as allowing males, including those self-identifying as "women," to access single-sex spaces designed for females, including bathroom, locker rooms, showers, or dormitories.
- DEI Training. Offering DEI training, the content, structure, or implementation of which stereotypes, excludes, or disadvantages individuals based on protected class, or otherwise creates a hostile environment.
- DEI Training & Hostile Work Environment. Creating an objectively hostile work environment by offering DEI training involving severe or pervasive presentations, videos, or other materials that single out, demean or stereotype individuals on the basis of protected class.
- Candidate Pools (Diverse Slates); Interview Panels. Explicitly mandating protected class representation, or implicitly prioritizing protected class characteristics, when forming candidate pools, such as diversity quotas, diverse slate policies, or composing decision-making panels.
- Supplier Diversity. Prioritizing contract awards to vendors owned by a specific protected class; automatically advancing such vendors over equally or more qualified businesses without protected class status; or using protected class as a tiebreaker or primary criterion, unless such process passes muster under the applicable standard of judicial scrutiny.
The Guidance also cautions about using "proxies" for protected classifications. "Proxies" means using an ostensibly neutral criterion as a substitute for protected class. Examples include: assessing candidates on the basis of "cultural competence," "overcoming obstacles," "diversity statements," "lived experience," or "cross-cultural skills" – to the extent it advantages individuals of a particular protected class.
The Guidance also offered certain "best practices," which largely consist of not engaging in the unlawful policies and practice outlined above. Best practices also include ensuring that all workplace programs, activities, and resources are open to all qualified individuals and basing selection decisions on specific, measurable skills and qualifications directly related to job performance or program participation. The Guidance further suggests focusing on merit-based criteria when selecting program participants (e.g., scholarship programs), such as academic merit or financial hardship, and documenting clear, legitimate rationales unrelated to protected class for hiring and promotion criteria, particularly if the selection process might correlate with protected class. Rigorously evaluating facially neutral criteria to ensure they are not proxies for protected classes also is among the recommended practices, as well as using non-discriminatory performance metrics and evaluating all candidates based on merit. The Guidance further recommends incorporating non-discrimination clauses in contracts or partnership agreements, requiring third parties to comply with federal law and specifying that federal funds cannot be used to discriminate. Finally, the Guidance suggests implementing and communicating clear anti-retaliation policies for protected activities and provide confidential, accessible channels for individuals to report concerns of unlawful practices.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
