Over the summer, the United States Department of Justice (DOJ) issued guidance clarifying how federal antidiscrimination laws apply to programs which the DOJ now considers discriminatory,  including initiatives labeled as Diversity, Equity, and Inclusion (DEI) programs. While this new guidance focuses primarily on entities receiving federal funding, it sheds light on the types of practices and policies which the current administration views as unlawful and has potentially far-reaching implications for employers and businesses of all types. Specifically, the DOJ warns that entities which are “subject to federal anti-discrimination laws, including…public and private employers, should review this guidance carefully to ensure all programs comply with their legal obligations.”

DEI Policies and Practices Deemed Unlawful

The DOJ’s primary concern appears to be DEI policies and programs. In the DOJ memorandum, Attorney General Pamela Bondi describes “the significant legal risks of initiatives that involve discrimination based on protected characteristics.” The guidance explains that recipients of federal funds, “like all other entities subject to federal antidiscrimination laws, must ensure that their programs and activities comply with federal law and do not discriminate on the basis of race, color, national origin, sex, religion, or other protected characteristics—no matter the program’s labels, objectives, or intentions.”

The guidance identifies a non-exhaustive list of potentially unlawful discriminatory actions that could result in the loss of federal funding or other unwanted attention from the federal government. Below is a summary of the areas of focus, along with the DOJ’s explanation of each.

Granting preferential treatment based on protected characteristics.

The DOJ considers the granting of preferential treatment based upon protected characteristics to be unlawful discrimination. Specific examples of unlawful practices include: preferential hiring or promotion practices (in which a federally funded entity’s DEI policy prioritizes candidates from underrepresented groups for admission, hiring, or promotion, where the preferred underrepresented groups are determined on the basis of a protected characteristic like race); race-based scholarships or programs (including internships, mentorship programs, or leadership initiatives that reserve spots for specific racial groups, regardless of intent to promote diversity); and access to facilities or resources based on race or ethnicity.

The prohibited use of proxies for protected characteristics.

According to the guidance, unlawful proxies occur when a federally funded entity uses ostensibly neutral criteria that effectively function as substitutes for race, sex, or other protected characteristics. Specific examples of unlawful practices include: “cultural competence” requirements (such as a required demonstration of cultural competitive, lived experience, or cross-cultural skills in ways that effectively evaluate racial or ethnic backgrounds); geographic or institutional targeting in the context of recruiting efforts; and application questions that solicit “diversity statements” or information about “overcoming obstacles.”

Segregation based upon protected characteristics.

According to the guidance, it is “generally impermissible” when programs, activities, or resources separate or restrict access based upon race, sex, or other characteristics, with some narrow exceptions. Examples of unlawful programs include race-based training programs that separate participants into race-based groups; programs that are available only to those who identify with a specific racial or ethnic group; and segregation in facilities or resources.

Training programs that promote discrimination or hostile environments.

Finally, the guidance emphasizes that an organization’s training programs can violate the law if the programs stereotype, exclude, or disadvantage individuals based on protected characteristics or otherwise “create a hostile environment.” Examples include DEI training that includes statements stereotyping groups, or the use of training materials or methods that single out, demean, or stereotype individuals based upon protected characteristics (such as “all white people are inherently privileged,” “toxic masculinity,” etc.).

DOJ’s Recommended Best Practices

The guidance identifies a list of non-binding “best practices” to comply with federal antidiscrimination laws, including:

• Ensure inclusive access to all workplace programs, activities, and resources to all qualified individuals, without organizing groups or sessions based upon protected traits;
• Focus on specific, measurable skills and qualifications directly related to job performance or program participation;
• Discontinue any program designed to achieve discriminatory outcomes, even those using facially neutral means;
• Document clear, legitimate rationales for criteria used in hiring, promotions, or selecting contracts;
• Carefully scrutinize neutral criteria for proxy effects;
• Eliminate diversity quotas;
• Ensure trainings are open to all qualified participants, regardless of protected characteristics;
• Include explicit nondiscrimination clauses in grant agreements, contracts, or partnership agreements; and
• Establish clear anti-retaliation procedures and safe reporting mechanisms.

While the guidance does not change the underlying antidiscrimination laws, it does reflect a significant change in enforcement priorities while shedding light on how the DOJ will evaluate complaints and pursue enforcement actions. Entities subject to federal antidiscrimination laws (including most private and public sector employers) should work with legal counsel to review their existing policies and practices.