Department of Justice Offers Further Guidance Regarding Unlawful Discrimination and DEI

At a Glance

• Department of Justice memo provides guidance for recipients of federal funding regarding what it considers unlawful discriminatory practices.
• The memo pays particular attention to institutions of higher education, although all federal contractors and employers subject to Title VII can glean insight into the administration’s views on potentially unlawful DEI.

On July 30, 2025, the Department of Justice released a memo from Attorney General Pam Bondi to all federal agencies providing guidance for recipients of federal funding regarding unlawful discrimination.

The attorney general’s memo applies specifically to recipients of federal funds,¹ and directs much of its attention to institutions of higher education. Nevertheless, federal contractors and, indeed, all employers subject to Title VII, will find the guidance to be worth reading for the insights it provides into the administration’s thinking.

The primary intention of the guidance is to clarify the administration’s views regarding the application of federal antidiscrimination laws to programs or initiatives that may involve discriminatory practices, especially those relating to diversity, equity, and inclusion or similar programs. The guidance provides examples of practices that the administration views as unlawful or potentially unlawful and offers recommendations on what it considers best practices.

As noted, many of the examples from the guidance are drawn from higher education. However, as employers in other industries and circumstances may engage in some analogous practices, they will also want to take into account the administration’s views. Indeed, the memo explicitly states that not only entities “that receive federal financial assistance” should review the guidance but that all entities that “are otherwise subject to federal antidiscrimination laws, including educational institutions, state and local governments, and public and private employers, should review this guidance carefully to ensure all programs comply with their legal obligations.”

In considering the guidance, it must be remembered that the views of the attorney general or the Department of Justice do not constitute law, but merely represent the administration’s interpretation of the law or, in some instances, advocacy for changes in the law. Ultimately, it is for Congress to establish the law through legislation and for the courts to interpret that legislation. It must also be remembered that state laws may differ from federal law. It is particularly important to keep this in mind when dealing with issues relating to transgender rights as the administration’s efforts to tightly circumscribe such rights are not clearly supported by federal caselaw and run directly contrary to many state laws.

The guidance includes non-exhaustive illustrative examples of conduct that may be perceived as conferring preferential treatment based on protected characteristics, which could be considered unlawful under applicable antidiscrimination laws:

Race-Based Scholarships or Programs: A university's DEI program establishes a scholarship fund exclusively for students of a specific racial group (e.g., “Black Student Excellence Scholarship”) and excludes otherwise qualified applicants of other races, even if they meet academic or financial need criteria. This extends to 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. Such race-exclusive programs violate federal civil rights law by discriminating against individuals based solely on their race or treating people differently based on a protected characteristic without meeting the strict legal standards required for race-conscious programs.

Preferential Hiring or Promotion Practices: A federally funded entity's DEI policy prioritizes candidates from “underrepresented groups” for admission, hiring, or promotion, 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: A university's DEI initiative designates a “safe space” or lounge exclusively for students of a specific racial or ethnic group.

The guidance also includes examples of conduct that may be perceived as segregation based on protected characteristics, which could be considered unlawful under applicable antidiscrimination laws:

Segregation in Facilities or Resources: A college receiving federal funds designates a “BIPOC-only study lounge,” facially discouraging access by students of other races. Even if access is technically open to all, the identity-based focus creates a perception of segregation and may foster a hostile environment. This extends to any resource allocation—such as study spaces, computer labs, or event venues—that segregates access based on protected characteristics, even if intended to create “safe spaces.” This does not apply to facilities that are single-sex based on biological sex to protect privacy or safety, such as restrooms, showers, locker rooms, or lodging.

Race-Based Training Sessions: A federally funded university hosts a DEI training program that requires participants to separate into race-based groups (e.g., “Black Faculty Caucus” or “White Ally Group”) for discussions, prohibiting individuals of other races from participating in specific sessions. In contrast, a “Faculty Academic Support Network” open to all faculty interested in promoting student success avoids reliance on protected characteristics and complies with federal law.

Implicit Segregation Through Program Eligibility: A federally funded community organization hosts a DEl-focused workshop series that requires participants to identify with a specific racial or ethnic group (e.g., “for underrepresented minorities only”) or mandates sex specific eligibility, effectively excluding others who meet objective program criteria.

The guidance further emphasizes that federally funded entities may violate antidiscrimination laws by using protected characteristics—such as race or sex—as criteria for employment decisions, contracting, or program participation:

Race-Based “Diverse Slate” Policies in Hiring: 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 (e.g., at least two “underrepresented minority” candidates), rejecting otherwise qualified candidates who do not meet this racial criterion. This extends to any policy that 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: A federally funded state agency implements a DEI policy that prioritizes awarding contracts to women-owned businesses, automatically advancing female vendors or minority-owned businesses over equally or more qualified businesses without preferred group status. This includes 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.

This example is worth emphasizing as many government contractors are required under federal, state, or local laws to set goals for the use of women- or minority-owned disadvantaged businesses and some non-government contractors voluntarily set such goals. Such programs have generally been found to be lawful in the past, but their continuing viability is less clear.

Race- or Sex-Based Program Participation: A federally funded university's internship program requires that 50% of selected participants be from “underrepresented racial groups” or female students, rejecting equally or more qualified applicants who do not meet these demographic criteria. This extends 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.

The guidance also provides a number of examples of potentially unlawful proxies for the consideration of sex or race:

“Cultural Competence” Requirements: 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. This includes selection criteria that advantage candidates who have experiences the employer associates with certain racial groups. For instance, requiring faculty candidates to describe how their “cultural background informs their teaching” may function as a proxy if used to evaluate candidates based on race or ethnicity.

Geographic or Institutional Targeting: 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”: 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, using the narrative as a proxy for advantaging that protected characteristic in providing benefits.

Further, according to the guidance, DEI training programs funded by federal dollars may be considered unlawful under Titles VI and VII in educational and workplace settings, if they:

• Stereotype, exclude, or penalize individuals based on race, sex, or other protected characteristics.
• Create a hostile environment through severe or pervasive training materials—such as presentations or videos—that demean or single out individuals.
• Impose ideological conformity using broad generalizations like “all white people are inherently privileged” or terms such as “toxic masculinity.”

In reviewing these examples, it is worth noting the extent to which the Trump administration is narrowly interpreting the Supreme Court’s explicit statement in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, that “nothing in this opinion should be construed as prohibiting universities from considering an applicant’s discussion of how race affected his or her life, be it through discrimination, inspiration, or otherwise.” 600 U.S. ___ (2023), slip op. at 39 (Roberts, C.J.)

Finally, among recommended best practices, the guidance suggests:

• Ensuring Inclusive Access: All workplace programs, activities, and resources should be open to all qualified individuals, regardless of race, sex, or other protected characteristics. Avoid organizing groups or sessions that exclude participants based on protected traits. Some sex separation is necessary where biological differences implicate privacy, safety, or athletic opportunity.
• Focusing on Skills and Qualifications: Base selection decisions on specific, measurable skills and qualifications directly related to job performance or program participation. For example, rather than asking about "cultural competence," assess specific skills such as language proficiency or relevant educational credentials. Criteria like socioeconomic status, first-generation status, or geographic diversity must not be used if selected to prioritize individuals based on racial, sex based, or other protected characteristics.
• Prohibiting Demographic-Driven Criteria: Discontinue any program or policy designed to achieve discriminatory outcomes, even those using facially neutral means. Intent to influence demographic representation risks violating federal law. For example, a scholarship program must not target “underserved geographic areas” or “first-generation students” if the criteria are chosen to increase participation by specific racial or sex-based groups. Instead, use universally applicable criteria, such as academic merit or financial hardship, applied without regard to protected characteristics or demographic goals.
• Documenting Legitimate Rationales: If using criteria in hiring, promotions, or selecting contracts that might correlate with protected characteristics, document clear, legitimate rationales unrelated to race, sex, or other protected characteristics. Ensure these rationales are consistently applied and are demonstrably related to legitimate, nondiscriminatory institutional objectives.
• Scrutinizing Neutral Criteria for Proxy Effects: Before implementing facially neutral criteria, rigorously evaluate and document whether they are proxies for race, sex, or other protected characteristics. For instance, a program targeting “low-income students” must be applied uniformly without targeting areas or populations to achieve racial or sex-based outcomes.
• Eliminating Diversity Quotas: Focus solely on nondiscriminatory performance metrics, such as program participation rates or academic outcomes, without reference to race, sex, or other protected traits. And discontinue policies that mandate representation of specific racial, sex-based, or other protected groups in candidate pools, hiring panels, or final selections. For example, replace a policy requiring “at least one minority candidate per slate” with a process that evaluates all applicants based on merit.
• Avoiding Exclusionary Training Programs: Ensure trainings are open to all qualified participants, regardless of protected characteristics. Avoid segregating participants into groups based on race, sex, or other protected characteristics. Trainings should not require participants to affirm specific ideological positions or “confess” to personal biases or privileges based on a protected characteristic.
• Including Nondiscrimination Clauses in Contracts to Third Parties and Monitor Compliance: Incorporate explicit nondiscrimination clauses in grant agreements, contracts, or partnership agreements, requiring third parties to comply with federal law, and specify that federal funds cannot be used for programs that discriminate based on protected characteristics. Monitor third parties that receive federal funds to ensure ongoing compliance, including reviewing program materials, participant feedback, and outcomes to identify potential discriminatory practices. Terminate funding for noncompliant programs.
• Establishing Clear Anti-Retaliation Procedures and Create Safe Reporting Mechanisms: Implement and communicate policies that prohibit retaliation against individuals who engage in protected activities, such as raising concerns, filing complaints, or refusing to participate in potentially discriminatory programs. Include these policies in employee handbooks, student codes of conduct, and program guidelines. Provide confidential, accessible channels for individuals to report concerns about unlawful practices.

Footnotes

1 Federal funding or federal financial assistance refers to programs, services, or activities that directly aid organizations, individuals, or state/local/tribal governments. Federal funding comes in a variety of forms, including grants, loans, direct payments, or insurance. Federal funding does not include federal government contracts. A federal government contract is generally an agreement between the federal government and another party for the provision of goods or services for a fee.