On July 29, 2025, in a guidance memorandum from Attorney General Pam Bondi, the Department of Justice (DOJ) describes the types of Diversity, Equity, and Inclusion (DEI) programs and practices that would violate federal antidiscrimination laws.  Specifically, the memo targets recipients of federal funding, but the guidance provides a general understanding for all employers. 

The guidance starts out with a reminder that all must ensure that their diversity 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.  It also states that the use of terms such as “DEI," "Equity," or other euphemistic terms do not excuse unlawful discrimination or absolve parties from scrutiny regarding potential violations.

The guidance also points out that using race, sex, or other protected characteristics for employment, program participation, resource allocation, or other similar activities, opportunities, or benefits, is unlawful, except in rare cases where such discrimination satisfies the relevant level of judicial scrutiny.

So, what constitutes illegal DEI?  The memo provides a variety of non-exhaustive examples. 

• Preferential Hiring or Promotion Practices: A federally funded entity's DEI policy prioritizes candidates from "underrepresented groups" for admission, hiring, or promotion, bypassing qualified candidates who do not belong to those groups, where the preferred “underrepresented groups" are determined on the basis of a protected characteristic like race or gender.
• The use of unlawful proxies: In other words, it is the use of facially-neutral criteria that function substantively as a proxy for explicit considerations of race, sex, or other protected characteristics.  For example, when an employer requires 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. This includes immigrant status, socioeconomic status, and geographic location (e.g. recruiting from Detroit area as a focus could be considered discriminatory).
• Unlawful Use of Protected Characteristics: According to the guidance, 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.
• Training program that may lead to a hostile environment: 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."  This situation is specifically what led to many of the DEI complaints during the first Trump administration.

The guidance also provides the following for things to do to avoid potential liability:

• Before implementing facially neutral criteria, rigorously evaluate and document whether they are proxies for race, sex, or other protected.  For example, federal law allows for workplace harassment trainings that are focused on preventing unlawful workplace discrimination and that do not single out particular groups as inherently racist or sexist. For instance, a program targeting "low-income students" must be applied uniformly without targeting areas or populations to achieve racial or sex-based outcomes.
• Focus solely on nondiscriminatory performance metrics, such as program participation rates or academic outcomes, without reference to race, sex, or other protected traits. 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.
• Ensure trainings are open to all qualified participants, regardless of protected characteristics. Avoid segregating participants into groups based on race, sex, or other protected characteristics. Training should not require participants to affirm specific ideological positions or “confess" to personal biases or privileges based on a protected characteristic.
• Implement and communicate policies that prohibit retaliation against individuals who engage in protected activities, such as raising concerns, filing complaints, or refusing to participate in potentially discriminatory programs. Include these policies in employee handbooks, student codes of conduct, and program guidelines. Provide confidential, accessible channels for individuals to report concerns about unlawful practices.

Earlier, the DOJ stated that celebrating Black History Month and the like, is legal. There still is “legal” diversity. Most federal contractors have generally complied with the activities that avoid potential liability but all organizations should ensure that they are as well. HR should conduct a DEI audit under attorney/client privilege to ensure compliance with the guidance and law.  If the external and internal website has not been scrubbed of diversity titles and topics, it likely should be as outside groups are using bots to identify organizations to file illegal DEI complaints against.

In recent developments, the DOJ began issuing civil investigative demands (CIDs) to federal contractors and grantees seeking documents and information related to their diversity, equity, and inclusion (DEI) practices under its Civil Rights Fraud Initiative (the “Initiative”) to “aggressively pursue” False Claims Act (FCA) enforcement against “any recipient of federal funds that knowingly violates federal civil rights laws.”  Using the hammer of the possible FCA, organizations can also face substantial collateral consequences, including potential debarment, reputational damage, and private civil suits, including shareholder class actions. FCA liability, or potentially even settlement of an FCA case, is reportable when seeking further government contracting or grant opportunities.  If your organization receives a CID, contact your attorney immediately.

Source: Morrison Foerster LLP 8/27/25, Steptoe 8/6/25