Update Applicable to:	Effective Date
All Covered Entities	July 30, 2025

What happened?

On July 30, 2025, the U.S. Department of Justice (DOJ) issued new guidance to clarify that federal antidiscrimination laws apply to all programs and initiatives funded by the federal government—including those labeled as Diversity, Equity, and Inclusion (DEI).

Overview:

The memo emphasizes that recipients of federal funding (including nonprofits, universities, employers, and state/local governments) must ensure their programs do not discriminate based on race, sex, national origin, religion, or other protected traits. This includes avoiding practices that may appear inclusive but result in unlawful treatment or exclusion.

• The guidance may conflict with state/local laws that protect gender identity or mandate DEI initiatives.

• While nonbinding, the memo signals increased federal scrutiny and potential funding consequences for violations.

Key Legal Principles

• Federal laws such as Title VI, Title VII, Title IX, and the Equal Protection Clause prohibit discrimination based on protected characteristics.
• DEI terminology does not shield unlawful practices from legal scrutiny.
• Liability extends to third-party vendors and programs funded by federal dollars.

Prohibited Practices: The DOJ identifies four main categories of unlawful conduct:

• Preferential Treatment
  • Race-exclusive scholarships, internships, or hiring policies.
  • Contract awards or program access based on race or sex.
  • Facilities or resources reserved for specific identity groups.

• Use of Proxies
  • Criteria like “cultural competence,” “lived experience,” or “overcoming obstacles” used to indirectly assess race or sex.
  • Geographic targeting based on racial demographics.

• Use of Proxies
  • Criteria like “cultural competence,” “lived experience,” or “overcoming obstacles” used to indirectly assess race or sex.
  • Geographic targeting based on racial demographics.

• Segregation
  • Identity-based lounges, study spaces, or training groups.
  • Employee Resource Groups (ERGs) limited to specific racial or sex-based groups.
  • Sex-separated spaces and sports must be based on biological sex.

• Discriminatory Training Programs
  • Trainings that stereotype or demean groups (e.g., “white privilege,” “toxic masculinity”).
  • Mandatory ideological affirmations or bias confessions.

Additional Information:

Best Practices for Compliance: Entities should:

• Audit DEI and employment policies for neutrality and legality.
• Eliminate quotas and demographic-based selection criteria.
• Focus on objective qualifications and document legitimate business justifications.
• Include nondiscrimination clauses in third-party contracts and monitor compliance.
• Maintain sex-separated spaces for privacy and safety based on biological sex.
• Establish confidential reporting channels and anti-retaliation policies.

Source References

• Justice Department Releases Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination
• Guidance For Recipients Of Federal Funding Regarding Unlawful Discrimination

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