On July 29, 2025, Attorney General Pam Bondi issued a memorandum to all federal agencies providing guidance addressing “unlawful discrimination” on the basis of race, color, national origin, sex, religion, or other protected characteristics (the "July 29 Guidance").
According to the memorandum, the July 29 Guidance is intended to clarify “the application of federal antidiscrimination laws to programs or initiatives that may involve discriminatory practices, including those labeled [DEI] programs.”
The Expanding Enforcement Framework
Although the July 29 Guidance does not expressly reference potential liability under the False Claims Act (“FCA”), it aligns closely with a series of recent Department of Justice (“DOJ”) pronouncements we have covered which explicitly position the FCA as a primary tool for policing civil rights violations.
- February 5, 2025: Memo by Attorney General Bondi to DOJ employees stating that DOJ would “investigate, eliminate, and penalize illegal DEI” programs in the private sector, including through potential criminal actions. (See our blog post here.)
- May 19, 2025: Memo by Deputy Attorney General Todd Blanche announcing the Civil Rights Fraud Initiative, which will “utilize the FCA to investigate and, as appropriate, pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws.” (See our blog post here.)
- June 11, 2025: Memo by Assistant Attorney General Brett A. Shumate pledging aggressive investigation and use of the FCA against “entities that receive federal funds but knowingly violate civil rights laws.” (See our blog post here.)
These DOJ initiatives build upon Executive Order 14173—“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”—issued by President Trump on January 21, 2025.
E.O. 14173 directed agencies to include in “every contract or grant award”:
- A “term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of [the FCA]”; and
- “to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”
As noted in our blog post covering E.O. 14173, an FCA action can be predicated on a “false certification” theory when a party falsely certifies compliance with a required contractual provision, statute, regulation, or government program.
Legal challenges to E.O. 14173 are ongoing. In February 2025, the U.S. District Court for the District of Maryland issued a preliminary injunction, in part because E.O. 14173 failed to explain what constitutes illegal DEI. The Fourth Circuit later granted the government’s motion for a stay pending appeal in March 2025. The July 29 Guidance, by offering detailed descriptions of unlawful discriminatory policies and practices, appears designed to fill that gap.
Unlawful Discriminatory Policies and Practices
The July 29 Guidance outlines a non-exhaustive list of “unlawful practices that could result in revocation of grant funding.”
The four categories of conduct include:
- Granting preferential treatment based on protected characteristics, including race-based scholarships or programs and access to facilities or resources based on race of ethnicity;
- Prohibited use of proxies for protected characteristics, which occur when a federally funded entity intentionally uses facially neutral criteria that function as substitutes for explicit consideration of race, sex, or other protected characteristics;
- Segregation based on protected characteristics, which occur when a federally funded entity organizes programs, activities, or resources in a way that separates or restricts access based on race, sex, or other protected characteristics; and
- Training programs that promote discrimination or hostile environments, meaning those that stereotype, exclude, or disadvantage individuals based on protected classes or create a hostile environment through content, structure, or implementation.
DOJ’s Recommended “Best Practices”
The July 29 Guidance identifies nine “best practices,” described as “non-binding suggestions to help entities comply with federal antidiscrimination laws and avoid legal pitfalls…not mandatory requirements but rather practical recommendations to minimize the risk of violations.”
The nine best practices include:
- Ensuring inclusive access for all, including ensuring that all workplace programs, activities, and resources should be open to all qualified individuals regardless of race, sex, or other protected characteristics.
- Focusing on specific, measurable skills and qualifications directly relating to job performance or program participation when making selection decisions.
- Prohibiting demographic-driven criteria, and instead using universally applicable criteria, such as academic merit or financial hardship;
- Documenting clear legitimate rationales unrelated to race, sex, or other protected characteristics;
- Evaluating and documenting facially neutral criteria to avoid proxies for race, sex, or other protected characteristics;
- Eliminating diversity quotas in favor of nondiscriminatory performance metrics, such as program participation rates or academic outcomes;
- Avoiding exclusionary training programs and segregating training participants into groups based on race, sex, or other protected characteristics;
- Including explicit nondiscrimination clauses in grant agreements, contracts, or partnership agreements with third parties; and
- Establishing clear anti-retaliation procedures and creating safe reporting mechanisms, to be included in employee handbooks, student codes of conduct, and program guidelines.
Key Takeaways and Current Best Practices
Race Neutral Programs Still Carry Enforcement Risk
The July 29 Guidance underscores that even programs that appear to be permissible (e.g., targeted recruiting, diversity statements, etc.) can violate federal anti-discrimination laws if applied in a manner that favors or disadvantages protected classes. Noncompliance can trigger enforcement risk, including revocation of federal funds and FCA exposure.
Statutes Remain Unchanged, but DOJ Expectations Are Crystallizing
While the July 29 Guidance does not amend or otherwise modify the federal anti-discrimination laws, it provides a clear roadmap as to how DOJ and other federal agencies will interpret and apply those laws when assessing enforcement and liability.
Comprehensive, Well-Documented Reviews Are Indispensable
Private-sector organizations, particularly recipients of federal funding, should promptly review any DEI and related plans, programs, and policies, as well as their affirmative action programs, to determine whether they contain any aspects that could be deemed unlawful under Title VII of the Civil Rights Act of 1964 or any other federal, state, or local civil rights law, and carefully consider whether to take any action to modify such plans, programs, or policies. Companies should continue to document compliance with anti-discrimination laws to mitigate government scrutiny in this political environment, as well as whistleblower risk.
Ongoing Vigilance Is Essential
Given how rapidly the enforcement landscape is evolving, organizations should exercise care in monitoring agency guidance and court decisions and update compliance controls as appropriate.
Our colleagues have prepared an in-depth Insight on specific aspects of the July 29 Guidance, which you can access here.
Epstein Becker Green Staff Attorney Ann W. Parks contributed to the preparation of this post.
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