Department of Justice (“DOJ”) Provides Guidance Regarding Unlawful Discrimination to Federal Funding Recipients
Department of Justice (“DOJ”) Provides Guidance Regarding Unlawful Discrimination to Federal Funding Recipients
Bayan Biazar, Associate
On July 29, 2025, the Attorney General of the United States (“Attorney General”) issued a memorandum titled “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination (the “Memo”).” The Memo is intended to clarify the application of federal anti-discrimination laws to Diversity, Equity, and Inclusion (“DEI”) programs or initiatives that may involve discriminatory practices.[1] The Memo highlights DEI efforts that could trigger legal scrutiny, even for private entities not directly benefitting from federal funds.
Potential Problem Areas With DEI Initiatives
The DOJ’s recent guidance takes aim at certain DEI practices that may expose organizations to discrimination claims. At the top of the list are programs that reserve opportunities, such as leadership tracks, mentorship, or internships, exclusively for members of a particular racial or gender group. Even if specifically designed to address underrepresentation, the DOJ warns that such preferences can violate federal anti-discrimination statutes.
The Memo also highlights risks in programs or employment selection-criteria that appear neutral on their face but effectively function as proxies for race or ethnicity. These include requirements framed as “cultural competence” or recruiting efforts concentrated in certain geographic areas which may inadvertently serve as gatekeeping barriers based on identity.
Programs that segregate participants by race or sex in training sessions or discussion groups, present another area of concern and could be unlawful, unless the segregation serves a narrow, lawful purpose. While diversity training remains permissible, the DOJ cautions against materials that stereotype groups or portray entire demographics as inherently advantaged or disadvantaged, or assign behavioral traits based solely on identity. Such approaches, the agency warns, can create a hostile work environment in violation of Title VII of the Civil Rights Act of 1964, even when the training is attempting to promote inclusion.
Recommended Practices to Stay Within Legal Bounds
The DOJ emphasizes that selection for opportunities should be based on merit, skills, and relevant qualifications, not on characteristics such as race or sex. Quotas and demographic targets carry legal risks and should be avoided in favor of broader outreach and inclusive recruitment practices.
The DOJ also cautions employers to examine seemingly neutral criteria, such as preferred schools, geographic locations, or subjective traits like “cultural fit” to ensure that they aren’t operating as proxies for protected characteristics. Equally important, the DOJ advises, is keeping thorough documentation that explains the business-related reasons for hiring, promotion, or program-selection decisions. Clear, objective rationales not only help defend against potential claims but promote internal consistency and add additional fairness, according to the DOJ.
Federal Contractors Face Heightened Risks
Under this new guidance, federal contractors and their subcontractors must be able to certify that their DEI programs comply with anti-discrimination laws. Misrepresentations of compliance with anti-discrimination laws could trigger liability. Importantly, the risk does not stop at direct contractors. Prime contractors can be held responsible for the actions of their subcontractors or vendors, meaning DEI-related noncompliance anywhere in the contractor-subcontractor chain could become a liability issue. The Memo emphasizes that the DOJ is attempting to seek clear compliance, or federal contractors could face tangible enforcement applications, even if the programs belong to their subcontractors or their subcontractors-subcontractor.
Employer Considerations
While the DOJ offers “best practices” for keeping DEI programs lawful, such as basing decisions on merit, avoiding quotas, and documenting nondiscriminatory rationales, Colorado employers must also consider these federal cautions in light of Colorado state law. Colorado’s Anti-Discrimination Act (“CADA”) parallels many federal protections but applies to a broader range of employers. That means even if a DEI program would escape federal scrutiny due to certain things (i.e., its size or scope), it could still violate state law if it is found to result in preferential treatment based on protected characteristics. Moreover, CADA prohibits discrimination on additional bases, such as sexual orientation, gender identity, and marital status, so employers’ DEI policies must be evaluated across a wider set of protections.
For Colorado employers—especially those who receive federal funding--the safest path to comply with this Memo is to design their DEI efforts to focus on expanding opportunities to all qualified individuals. Campbell Litigation is available to review and advise on any DEI programs to ensure they meet both the DOJ’s latest guidance and applicable Colorado law.[2]
[1] See https://www.justice.gov/ag/media/1409486/dl for the full Guidance Memo.
[2] See https://www.rockymountainemployersblog.com/blog/2025/5/29/department-of-justice-to-use-the-false-claims-act-to-combat-dei; see also https://www.rockymountainemployersblog.com/blog/2025/5/1/executive-order-14281-disparate-impact-discrimination-claims-and-enforcement-directly-under-fire; see also https://www.rockymountainemployersblog.com/blog/2025/1/30/the-trump-administration-brings-attack-on-illegal-dei-policies-to-the-private-sector, for more discussions on The Rocky Mountain Employer tracking the Trump Administration’s stance on DEI initiatives.