Published: CT Law Tribune
On July 29, 2025, the U.S. Department of Justice (DOJ) issued a memorandum providing guidance for recipients of federal funding regarding unlawful discrimination. The Memorandum identifies “best practices” and provides non-binding suggestions to ensure entities remain compliant with federal antidiscrimination laws while avoiding “legal pitfalls.” The Memorandum, in accordance with President Trump’s agenda, cracks down on Diversity, Equity, and Inclusion (DEI) programs. Although the Memorandum is directed at entities which receive federal funding, the Memorandum urges all employers, public and private, to review their hiring practices and DEI programs.
DEI programs have faced extensive scrutiny throughout President Trump’s second term. In January, Trump issued Executive Order 14173 (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”) which stated that illegal DEI policies “undermine our national unity as they deny, discredit, and undermine the traditional American values of hard work, excellence, and individual achievement in favor of an unlawful, corrosive, and pernicious identity-based spoils system.” Since then, the DOJ announced it intends to actively enforce the White House’s interpretation of federal civil rights laws. In May, Deputy Attorney General, Todd Blanche initiated the Civil Rights Fraud Initiative to use the False Claims Act (a law that allows the government to sue anyone who falsely files a claim for payments with the federal government) against recipients of federal funding who violate civil rights laws. The DOJ’s Memorandum was subsequently released.
The Memorandum provides a non-exhaustive list of unlawful discriminatory policies and practices which could result in the revocation of grant funding. Furthermore, federally funded entities may also be liable for discrimination if they knowingly fund (by paying contractors) the unlawful practices of contractors, grantees, and other third parties. Specified unlawful discriminatory practices are:
- Preferential treatment based on protected characteristics;
- Use of proxies for protected characteristics;
- Segregation based on protected characteristics; and
- Training programs that promote discrimination or hostile environments.
The Memorandum cites Title VI of the Civil Rights Act of 1964, Title VII of the Civil Rights Act 1964, Title IX of the Education Amendments of 1972, and the Equal Protection Clause of the Fourteenth Amendment as the applicable civil rights laws.
Unlawful preferential treatment
According to the Memorandum unlawful preferential treatment occurs when opportunities, benefits or advantages are provided to individuals or groups based on protected characteristics, such as race and sex, in a way which disadvantages other qualified persons. There are a few narrow exceptions, however the Memorandum does not explain this. Examples of specified unlawful practices include race-based scholarships, internships, or other programs “regardless of intent to promote diversity;” hiring or promotion practices which prioritize candidates from “underrepresented groups;” and access to facilities or resources based on race or ethnicity.
Prohibited use of Proxies
Unlawful proxies are systems intended to sound neutral, but in fact act as a substitute for consideration of sex, race, or other protected characteristics. Requiring candidates to have “cultural competence” or “diversity statements” may invite scrutiny, if the DOJ believes such requirements are intended to advance those with protected characteristics. Other terms which may be considered proxies include preference for “lived experience” or “cross-cultural skills.”
Proxies do not always involve specific language choices. Recruitment strategies which target specific geographic areas, institutions, or organizations will also be considered unlawful, if they are selected for their racial composition rather than other “legitimate factors.” The DOJ wants recruitment to focus solely on what it considers “objective qualifications.”
Segregation Based on Protected Characteristics
The Memorandum strictly prohibits segregation of individuals based on protected characteristics. Such unlawful practices include race-based training sessions; “safe spaces” based on protected characteristics (not including single sex facilities to protect privacy/safety); and programs limiting eligibility based on protected characteristics. Such practices are generally considered unlawful as they create unequal treatment and reinforce stereotypes. The stated goal of such practices is irrelevant even if it is promoting inclusion or addressing historical inequities.
Notably the Memorandum does include exceptions. It calls for sex-based boundaries to be “rooted in biological differences.” Areas designated for woman such as bathrooms, showers, locker rooms, or dorms are restricted to biological women. Policies which would allow males, “including those self-identifying as ‘women’,” access to such areas may create a hostile work environment under Title VII and may extend to Title IX in education. These sex-based boundaries extend to athletic events.
DEI Training Programs
DEI training programs which “stereotype, exclude, or disadvantage” individuals based on protected characteristics or create a hostile work environment, are considered unlawful. DEI programs which use language such as “all white people are inherently privileged,” “toxic masculinity,” etc. may be considered unlawful because they stereotype individuals. Such programs may violate Title VI or Title VII of the Civil Rights Act of 1964, particularly if they impose penalties for dissent.
DOJ Recommended Best Practices
The DOJ provided a list of best practices it suggests employers and federally funded entities adopt to avoid any legal pitfalls related to DEI.
- Ensure inclusive access to all workplace programs and resources.
- Selection decisions must be based on specific measurable skills and qualifications. Criteria such as “socioeconomic status, first-generation status, or geographic diversity” cannot be used to prioritize individuals based on protected characteristics.
- Prohibit demographic-driven criteria for any programs or policies, intended to increase participation from specific “racial or sex-based” groups.
- If using criteria in hiring or promotions that could correlate with protected characteristics, clearly outline the “legitimate” rationales, unrelated to protected characteristics, in making such a decision.
- Review documents for proxies for race, sex, or other protected characteristics.
- Eliminate diversity quotas.
- Ensure training programs are open to all qualified participants. Trainings may not require individuals to “confess” biases or privileges based on characteristics.
- Include nondiscrimination clauses in contracts with third parties and monitor compliance.
- Create anti retaliation procedures and confidential reporting mechanisms.
The Memorandum restricts hiring policies and DEI programs, furthering the Administration’s ongoing fight against DEI. Since the issuance of this Memorandum, President Trump signed an executive order to limit federal grant approvals, requiring grant awards to be evaluated by his political appointees. The order criticized DEI programs and transgender policies among federally funded entities and educational institutions. The White House stated awards must “advance the president’s policy priorities.” DEI programs appear to be in peril as the Trump Administration continues to combat ideologies it considers “anti-merit.”
DEI Training Programs in 2025
Statistics from early 2025 indicate DEI programs are a divisive issue. An Economist/YouGov poll from January showed that 45% of participants were in favor of ending DEI programs within school and government, whereas 40% were opposed. Critics believe DEI unfairly advantages underrepresented groups, preferring a system based exclusively on “merit.” Whereas those in favor argue DEI is a more equitable system promoting diverse talent, which actually helps businesses.
Regardless of one’s stance, it is clear the Trump presidency has had a ripple effect throughout the corporate world. While companies such as Apple have resisted political pressure, a vast number of companies such as BlackRock, Bank of America, Warner Bros., and IBM removed diversity quotas or removed references to DEI altogether in 2025. This is a radical turnaround only three years ago BlackRock’s CEO stated the company “must embed DEI into everything we do.” According to the Conference Board, S&P 500 companies reduced the usage of four terms in major filings from 2024 to 2025: “DEI” declined by 68%, “racial” declined by 58%, “gender” declined by 35%, and “diversity” declined by 33%. Other statistics indicate that 53% of S&P 100 companies have begun adjusting how they organize or communicate DEI efforts in their 2025 annual report filings, compared to 2024. It is clear that what is being done on the federal level has had a larger effect on corporate attitudes towards DEI in the private sector.
These reversals on DEI have not come without backlash; Target, Amazon, and Walmart have experienced multiple boycotts since changing their DEI policies. Target suffered a 6.2% decline in foot traffic for 8 straight weeks following its policy changes.
Employer take aways
As discussed, 2025 has been a turbulent year for DEI programs and the DOJ’s Memorandum is a continuation of President Trump’s war against what he calls “far left” “anti-merit” ideologies. While the Memorandum clearly applies to federally funded entities, it warns that the guidance also serves as an example of what behavior may violate federal antidiscrimination laws for all employers, public or private. As there is heightened scrutiny on DEI initiatives, it is important that employers carefully review and if necessary, revise their policies and practices to ensure compliance with this new interpretation of federal law. However, it should be noted that cities, counties, and states may have their own laws or anti-discrimination policies which would impact DEI policies, and they may differ greatly for the federal interpretation of these principals. Employers should review their policies in light of federal, state, and city laws.
Brody and Associates regularly advises management on compliance with the latest local, state and federal employment laws. If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.
