Overview
On July 29, 2025, in a memorandum from Attorney General Pam Bondi, the Department of Justice (DOJ) describes the types of Diversity, Equity, and Inclusion (DEI) programs and practices that it has determined violate federal antidiscrimination laws (the Memo). The Memo, titled "Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination," represents a further step in the current administration’s efforts to eliminate DEI programs. It outlines how the DOJ will interpret and enforce these laws and provides direction for federally funded entities to reduce legal risks.
The Memo begins with an overview of the relevant legal framework and then fulfills two primary objectives:
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It provides a non-exhaustive list of DEI policies and practices that the DOJ deems unlawful, offering illustrative examples; and
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It recommends a list of "Best Practices" for entities to adopt to mitigate legal risks.
Non-Exhaustive List of DEI Policies and Practices that the DOJ Deems Unlawful
The DOJ identifies certain practices as unlawful, describing them as follows:
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Granting Preferential Treatment Based on Protected Characteristics
The Memo defines "preferential treatment" as providing "opportunities, benefits, or advantages to individuals or groups based on protected characteristics in a way that disadvantages other qualified persons, including such practices portrayed as 'preferential' to certain groups" (emphasis added). According to the DOJ, practices such as race-exclusive scholarships (including internships, mentorship programs, or leadership initiatives), hiring or promotion preferences based on underrepresented status, or access to facilities limited by race violate federal law unless they meet narrow legal exceptions.
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Prohibiting Use of Proxies for Protected Characteristics
The Memo explains that it is unlawful for entities to use facially-neutral criteria that function substantively as a proxy for explicit considerations of race, sex, or other protected characteristics. This includes practices like requiring applicants to describe "cultural competence" or "lived experience" in ways that favor certain racial or ethnic backgrounds, targeting recruitment based on the demographic makeup of specific geographic areas or institutions, or using "diversity statements" and "overcoming obstacles" narratives that advantage applicants based on experiences tied to protected characteristics.
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Segregation Based on Protected Characteristics
The Memo declares it unlawful to structure programs, activities, or resources in ways that segregate or restrict access based on traits like race or sex, regardless of intent. Exceptions are limited, such as when federal law explicitly allows remedies for past documented discrimination or in contexts like correctional facilities. The Memo also warns that failing to maintain sex-separated spaces—like restrooms, locker rooms, or athletic competitions—can violate Title VII and Title IX by compromising women's privacy, safety, and equal opportunity. Examples of unlawful practices include race-based training sessions, identity-exclusive facilities like "BIPOC-only" lounges, and programs that restrict eligibility to certain racial or ethnic groups (e.g., for underrepresented minorities only), all of which exclude other qualified individuals.
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Unlawful Use of Protected Characteristics
According to the Memo, it is unlawful to consider traits like race or sex in employment, contracting, or program participation decisions, whether explicitly—such as requiring demographic representation in candidate pools—or implicitly through diversity-focused evaluations, even if intended to promote diversity. Examples include hiring policies that require a minimum number of candidates from specific racial groups, contract awards that prioritize women- or minority-owned businesses over more qualified vendors, and programs that set quotas for participation based on race or sex, such as internships or scholarships reserved for underrepresented groups.
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Training Programs that Promote Discrimination or Hostile Environments
Lastly, the Memo cautions DEI training programs that stereotype, exclude, or disadvantage individuals based on protected characteristics or that create a hostile environment. This includes the severe or pervasive use of training content or materials that single out or demean individuals—such as statements suggesting "all white people are inherently privileged" or referencing "toxic masculinity, etc." Such trainings may violate Title VI or Title VII by fostering discrimination, retaliation, or a hostile work environment.
List of "Best Practices" for Entities to Adopt to Mitigate Legal Risk
To close out the Memo, the DOJ compiled non-binding suggestions that an entity can adopt to assess its DEI practices and ultimately avoid legal pitfalls. The Memo makes clear that "these are not mandatory requirements but rather practical recommendations to minimize the risk of violations."
In summary, the Memo recommends that entities:
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Open all programs to qualified individuals regardless of protected traits, allowing separation only when necessary for privacy, safety, or athletic reasons.
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Use measurable, job-related skills for selection, avoiding criteria that may serve as proxies for protected traits, such as "underserved geographic areas" or "first-generation students" if used to increase race or sex-based participation.
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Remove criteria aimed at shaping demographics and apply neutral standards, such as merit or financial need.
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Document legitimate rationales unrelated to race, sex, or other protected characteristics, if criteria in hiring, promotions or contract selection are linked to protected traits.
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Ensure that neutral criteria do not act as a proxy for race, sex, or other protected traits; for example, ensure a program for low-income students is applied uniformly without targeting specific populations.
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Eliminate quotas and demographic targets; use only performance-based metrics.
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Make trainings inclusive and avoid requiring participants to affirm specific ideological positions or confess to personal biases or privileges tied to protected traits.
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Add nondiscrimination clauses to contracts and monitor third-party compliance, ending funding if needed.
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Enforce anti-retaliation policies and offer safe, confidential avenues for reporting discrimination.
Consequences of continuing unlawful policies and practices can include "revocation of grant funding" or liability for "discrimination if they knowingly fund the unlawful practices of contractors, grantees, and other third parties." As a result, the DOJ urges all "[e]ntities that receive federal financial assistance or that are otherwise subject to federal antidiscrimination laws, including educational institutions, state and local governments, and public and private employers" to "review this guidance carefully."
Steptoe’s team has extensive experience assessing companies' DEI practices and providing tailored compliance guidance to increase alignment with federal antidiscrimination laws and recently issued federal guidance. We also routinely assist clients in navigating conflicting state and federal DEI requirements, particularly when laws or guidelines diverge. If your organization is seeking assistance in evaluating its DEI efforts, we are here to help.
