August 22, 2025 • News

DOJ Issues Best Practices for Recipients of Federal Funding to Avoid DEI Violations

On July 30, 2025, the U.S. Department of Justice issued a memo titled “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination,” offering “non-binding suggestions” to help entities minimize the risk of committing unlawful discrimination as defined by the current administration. Areas of scrutiny – and as a result, significant legal pitfalls – include:

• DEI programs and training: “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.”
• Protected characteristics as criteria for employment, program participation, resource allocation, or other similar activities, opportunities, or benefits. Examples include:
  • Race-based or sex-based scholarships or programs
  • Sex-based selection for contracts such as prioritizing women-owned or minority-owned businesses
  • Preferential hiring or promotion practices that prioritize “underrepresented groups” and bypass qualified candidates who do not belong to those groups, such as race-based “diverse slate” hiring policies
  • Access to facilities or resources based on race or ethnicity such as a university “safe space” or lounge exclusively for students of a specific racial or ethnic group
• Importance of sex-separated intimate spaces and athletic competitions
• Proxy discrimination: Ostensibly neutral criteria that function as substitutes for explicit consideration of race, sex, or other protected characteristics violate federal law if intended to advantage or disadvantage individuals based on protected characteristics. Examples of potentially unlawful proxies:
  • “Cultural competence,” “lived experience,” or “cross-cultural skills” as job applicant criteria
  • Geographic or institutional targeting chosen primarily because of their racial or ethnic composition 
  • “Overcoming obstacles” narratives or “diversity statements” for applicants to federally funded program
• Third-party funding: Recipients of federal funds should ensure federal funds do not support third-party programs that discriminate.
• Retaliation: Unlawful retaliation occurs when a federally funded entity takes adverse action against employees, participants, or beneficiaries because they engage in protected activities related to opposing DEI practices they reasonably believe violate federal antidiscrimination laws. 

Recommendations on best practices include:

• Ensure inclusive access to all workplace programs, activities and resources. Some sex separation is necessary where biological differences implicate privacy, safety, or athletic opportunity.
• Focus on skills and qualifications Criteria such as socioeconomic status, first-generation status, or geographic diversity must not be used to prioritize individuals based on racial, sex-based, or other protected characteristics.
• Prohibit demographic-driven criteria Discontinue any program or policy using such criteria.
• Document legitimate rationales unrelated to race, sex or other protected characteristics in hiring, promotions, or selecting contracts.
• Scrutinize neutral criteria for proxy effects
• Eliminate diversity quotas Discontinue policies that mandate representation of specific racial, sex-based or other protected groups in candidate pools, hiring panels, or final selections.
• Avoid exclusionary training programs including programs that require participants to affirm specific ideological positions or “confess” to personal biases or privileges based on protected characteristics.
• Include explicit nondiscrimination clauses in contracts to third parties and monitor compliance including grant agreements, contracts, or partnership agreements. Monitor by reviewing program materials, participant feedback, and outcomes; terminate funding for noncompliant programs.
• Establish clear anti-retaliation policies and procedures for individuals who report concerns about unlawful practices, including creating safe reporting mechanisms Include this information in employee handbooks, student codes of conduct, and program guidelines.