On July 29, 2025, the U.S. Attorney General issued guidance to federal agencies and recipients of federal funding regarding unlawful discrimination, particularly in programs labeled as Diversity, Equity, and Inclusion (DEI). This guidance clarifies the application of federal anti-discrimination laws and provides recommendations to help entities avoid potential legal risks. It emphasizes that programs must not discriminate based on protected characteristics such as race, color, national origin, sex, or religion, regardless of their stated labels or intentions.
The guidance is not law but offers “Best Practices” as non-binding suggestions to help entities comply with federal antidiscrimination laws and minimize risk of violations.
Key Takeaways for Employers
Federal anti-discrimination laws, including Title VII of the Civil Rights Act of 1964, prohibit discrimination based on protected characteristics. The guidance highlights several practices that could be considered unlawful:
- Preferential Treatment. Granting opportunities, benefits, or advantages based on protected characteristics in a way that disadvantages others is generally unlawful. This includes race-exclusive scholarships, preferential hiring for “underrepresented groups” based on a protected characteristic or designating facilities exclusively for a specific racial or ethnic group.
- Use of Proxies. Using seemingly neutral criteria, such as “cultural competence,” “lived experience,” or “diversity statements,” as a substitute for explicit consideration of protected characteristics is also prohibited if the intent is to advantage or disadvantage individuals based on those traits.
- Segregation. Programs or activities that separate individuals based on protected characteristics, even for reasons like promoting inclusion, are generally impermissible. This includes race-based training sessions or designating facilities for specific groups. However, the guidance notes that maintaining sex-separated intimate spaces and athletic competitions can be necessary to protect privacy, safety, and equal opportunity.
- Retaliation. Individuals who object to or refuse to participate in discriminatory programs or policies are protected from adverse actions.
Next Steps for Employers
This guidance is a reminder that while the goals of DEI programs may be well-intentioned, their implementation must strictly adhere to federal anti-discrimination laws. By prioritizing equal opportunity for all, entities can avoid legal, financial, and reputational risks. To ensure compliance and mitigate risks, employers should take the following steps:
- Review All Programs and Policies: Carefully review all programs, policies, and partnerships, including those related to DEI, to ensure they do not involve discriminatory practices.
- Focus on Nondiscriminatory Criteria: Ensure all selection decisions for hiring, promotions, or program participation are based on specific, measurable skills and qualifications directly related to job performance or program requirements, not on protected characteristics.
- Update Contracts/Vendor Agreements: Consider incorporating explicit nondiscrimination clauses into grant agreements and third-party contracts and monitor compliance.
- Document Legitimate Rationales: If using criteria that might correlate with protected characteristics, document clear, legitimate, and consistently applied rationales that are unrelated to race, sex, or other protected characteristics.
- Establish Clear Anti-Retaliation Procedures: Implement and communicate policies that prohibit retaliation against individuals who raise concerns about potential discriminatory practices.
- Read the Guidance in its Entirety: Entities receiving federal funds should review the guidance carefully to ensure all programs comply with their legal obligations.
