Department of Justice Issues Guidance on DEI for Recipients of Federal Funding
Aligning with the Trump administration’s recent series of Executive Orders targeting Diversity, Equity, and Inclusion (“DEI”), the Department of Justice (“DOJ”) recently released a memorandum entitled “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination.” While the guidance is not binding, it is illustrative of the DOJ’s approach to enforcing federal antidiscrimination laws. Employers that receive federal funding should pay particular attention to the guidance, though the guidance document is of note to all employers. The guidance provides a non-exhaustive list of practices that the DOJ views as potentially unlawful, and further details some “best practices” for employers to consider implementing to ensure compliance with federal anti-discrimination laws.
Unlawful Discriminatory Policies and Practices
The guidance highlights certain practices that it states could result in loss of grant funding as well as liability for discrimination. Importantly, the guidance highlights that recipients of federal funds may also be at risk for claims of discrimination if they knowingly fund unlawful practices of third parties such as contractors or grantees.
Preferential Treatment Based on Protected Characteristics
The guidance notes that unlawful preferential treatment occurs when “entities provide opportunities, benefits, or advantages to individuals or groups based on protected characteristics in a way that disadvantages other qualified persons.” As examples of potentially illegal preferential treatment the guidance highlights:
Internships, mentorship programs, scholarships, and leadership initiatives that reserve spots for specific racial groups, regardless of intent to promote diversity;
Preferential hiring and promotion practices that prioritize candidates from underrepresented groups where the underrepresented groups are determined based on a protected characteristic; and
Facilities and/or resources reserved exclusively for members of a specific racial or ethnic group, such as “safe spaces” for individuals of a particular group.
Proxies for Protected Characteristics
Using facially neutral criteria as a “proxy” for explicitly considering a protected characteristic is also considered unlawful. According to the guidance, proxies “correlate with, replicate, or are used as substitutes for protected characteristics” and “are implemented with the intent to advantage or disadvantage individuals based on protected characteristics.” Examples of potentially unlawful proxies include:
Cultural competency requirements, questions about “lived experience” or “cross-cultural skills”, including requiring candidates to describe how their cultural background informs their work if these questions are evaluating candidates based on race or ethnicity rather than objective qualifications;
Targeting specific geographic areas due to their racial or ethnic composition rather than other factors; and
Requiring applicants to submit diversity statements or describe obstacles they have overcome if individuals who discuss experiences intrinsically tied to protected characteristics are advantaged.
Segregation Based on Protected Characteristics
Unlawful segregation occurs when a federally funded entity organizes programs and activities in a way that restricts access based on a protected characteristic. The guidance highlights the example of a training which breaks participants into race-based groups and prohibits individuals of other races from participating in specific sessions. The guidance notes that this separation generally violates federal law, except in limited circumstances, even if the stated goal of the action is positive (e.g., addressing historical inequities). Despite this type of separation being prohibited, the guidance carves out an exception for maintaining sex-separated “intimate spaces.” Thus, the guidance notes that federally funded institutions should not “allow males, including those self-identifying as ‘women’ to access single-sex spaces designed for females—such as bathrooms, showers, locker rooms, or dormitories.” Importantly, many state and local laws mandate a different approach toward restroom access, focusing on permitting individuals to use the restroom of the gender with which they identify. Organizations should therefore work closely with qualified counsel to best determine how to navigate the legal requirements and potential federal enforcement priorities. Additional examples of potentially unlawful segregation include:
Facilities and/or resources that have an identity-based focus that facially discourages members of other races from use, even if technically open to all. (e.g., a “BIPOC-only” lounge area); and
Implicit segregation through program eligibility, including hosting programs only open to members of a specific racial or ethnic group or mandating sex-specific eligibility such that those who do not meet the program’s criteria are effectively excluded.
Unlawful Use of Protected Characteristics
The guidance also details that unlawful use of protected characteristics occurs whenever a federally funded entity considers race, sex, or any other protected trait in making its hiring/promotion decisions, entering into contracts, and/or selecting candidates for internships, scholarships, training programs, and admission, unless the program or action satisfies a very defined level of applicable judicial scrutiny. “This includes policies that explicitly mandate representation of specific groups in candidate pools or implicitly prioritize protected characteristics through selection criteria, such as ‘diverse slate’ requirements, diversity decision-making panels, or diversity-focused evaluation.” Examples of potentially unlawful use of protected characteristics include:
Race-based “diverse slate” policies in hiring requiring that interview slates include a minimum number of candidates from a specific racial group (e.g., at least two underrepresented minority candidates) and reject otherwise qualified candidates who do not meet these criteria. “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, including any contract selection process that considers sex or race, such as policies favoring minority- or women-owned businesses over other equally or more qualified businesses.
Training Programs that Promote Discrimination or Hostile Environments
The guidance defines “unlawful DEI training programs” as those that stereotype, exclude, or disadvantage individuals based on protected characteristics or create a hostile environment. As examples of DEI training that may violate Title VII, the guidance lists trainings that include statements such as “all white people are inherently privileged” or that make reference to “toxic masculinity.”
DOJ’s Recommendations on Best Practices Moving Forward
The guidance provides some best practices to “help entities comply with federal antidiscrimination laws and avoid legal pitfalls.” These suggestions are highlighted below.
Ensure inclusive access: All programs should be open to all qualified individuals regardless of race, sex, or other protected characteristics.
Focus on skills and qualifications: Make decisions based on specific and measurable qualifications directly related to job performance and specific skills alone without regard to protected characteristics. If socioeconomic status, first-generation status, or geographic diversity are utilized to prioritize individuals based on protected characteristics, then the DOJ considers them inappropriate criteria.
Prohibit demographic-driven criteria: Do not use facially-neutral policies to achieve discriminatory outcomes. For instance, intent to influence demographic representation by targeting a specific geographic area or type of candidate (e.g., first-generation students) risks violating federal law “if the criteria are chosen to increase participation by specific racial or sex-based groups.”
Document legitimate rationales: If using certain criteria in hiring or promoting individuals, document clear and legitimate rationales for decisions unrelated to race, sex, or other protected characteristics.
Scrutinize neutral criteria for proxy effects: Before implementing facially neutral practices, evaluate and document whether they are proxies for consideration of protected characteristics. Notably, this recommendation is somewhat counter to the administration’s position on the continuing viability of the disparate impact theory of liability under Title VII – where employers may be found liable for facially neutral practices which have an adverse effect on a particular category of individuals.
Eliminate diversity quotas: Only consider “nondiscriminatory performance metrics” when making hiring/promotion decisions 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.”
Avoid exclusionary training programs: Ensure that trainings are open to all qualified participants irrespective of protected characteristics, avoid segregating participants into groups based on protected characteristics, and do not require training participants to affirm specific ideological positions or “confess” privileges or biases based on protected characteristics.
Include nondiscrimination clauses in third-party contracts and monitor compliance: Incorporate explicit nondiscrimination clauses in contracts that require third parties to comply with federal law and specify that federal funds cannot be used for discriminatory programs and “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.”
Establish clear anti-retaliation procedures and create safe reporting mechanisms: Implement policies that prohibit retaliation against individuals that engage in protected activities such as raising concerns, filing complaints, or refusing to participate in potentially discriminatory programs.
The Firm will be closely monitoring these developments, additional guidance, and any associated legal challenges. In the interim, employers should consult with counsel to determine whether policies or practices comply with the DOJ’s guidance. A privileged audit can help employers assess areas of potential improvement including updating or revising internal policies, adjusting employee training sessions, reviewing third-party contracts, and implementing practices for documenting employment decisions. Employers with questions or related concerns should contact Sabrina Jorge at sjorge@fglawllc.com or any other attorney at the Firm.
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