The DOJ Issues Guidance to Federal Funding Recipients Regarding Unlawful Discrimination, But All Employers Should Pay Attention

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Patricia Tsipras

August 12, 2025

On July 29, 2025, the U.S. Department of Justice (DOJ) issued a memorandum entitled, “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination.”  The memorandum addresses how federal anti-discrimination laws, including those relating to Diversity, Equity, and Inclusion programs, apply to recipients of federal funding, including educational institutions, state and local governments, and public and private employers.

Even if you are not a recipient of federal funds, the DOJ’s memorandum is important because other federal agencies, like the U.S. Equal Employment Opportunity Commission, likely will look to it when interpreting anti-discrimination laws against employers, regardless of their receipt of federal funding. 

 The DOJ’s memorandum outlines the following best practices:[1]

• You must not discriminate based on protected characteristics, regardless of the program’s intentions, objectives, or labels.
• You must comply with federal anti-discrimination laws, like Title VI of the Civil Rights Act of 1964[2]; Title VII of the Civil Rights Act of 1964[3]; Title IX of the Education Amendments of 1972[4]; Section 504 of the Rehabilitation Act of 1973[5]; and the Equal Protection Clause of the Fourteenth Amendment.
• You must avoid practices that could be considered unlawful discrimination, such as giving preferential treatment based on protected characteristics (e.g., a scholarship program for black students); using proxies for protected characteristics (e.g., geographic targeting); segregating based on protected characteristics; or using training programs that promote discrimination or hostile work environments (e.g., a program that uses presentations, videos, or other training materials that single out, demean, or stereotype individuals based on protected characteristics).
• Retaliation is prohibited – e.g., individuals who object to or refuse to participate in discriminatory programs, trainings, or policies are protected from adverse actions, like termination or exclusion, based on their opposition.
• Failure to comply with federal anti-discrimination laws risk revocation of federal funding and potential enforcement actions under the False Claims Act.
• Recipients of federal funding also may be held liable if they knowingly fund the discriminatory practices of contractors, grantees, or other third parties.

The DOJ offers the following suggestions to assist with federal law compliance:

• Ensure inclusive access to all workplace programs, activities, and resources, regardless of protected characteristics, while acknowledging that some separation based on sex is necessary where privacy or safety concerns are at issue.
• Base selection decisions on specific, measurable skills and qualifications that relate directly to the job or program.
• Use universally-applicable criteria, such as academic merit or financial hardship, to make selections, as opposed to targeting “underserved geographic areas,” for example.
• If you use selection criteria that could correlate with protected characteristics, document the reasons, ensure the criteria are applied consistently, and ensure that they relate to legitimate, non-discriminatory objectives.
• Even if you use neutral criteria, scrutinize them to determine if they are proxies for protected characteristics. By way of example, a program targeting “low-income students” must be applied uniformly without targeting areas or populations to achieve racial- or sex-based outcomes.
• Eliminate diversity quotas. Focus on nondiscriminatory performance metrics.
• Ensure that training is open to all qualified participants, regardless of protected characteristics, and avoid segregating participants into groups based on protected characteristics.
• Include nondiscrimination clauses in contracts with third parties and monitor their compliance with those clauses.
• Establish anti-retaliation policies and reporting mechanisms.

Employers:  Use the DOJ’s guidance to audit your programs, policies, and partnerships to ensure compliance with federal law.  We can help.

This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice.  Always consult an attorney with specific legal issues.

[1]              The memorandum describes its guidance as “best practices” – non-binding suggestions to help entities comply with federal anti-discrimination laws and avoid legal pitfalls; not mandatory requirements, but practical recommendations to minimize the risk of violations.

[2]              Title VI prohibits discrimination based on race, color, and national origin in programs receiving federal financial assistance.

[3]              Title VII prohibits employment discrimination based on race, color, religion, sex, or national origin.

[4]              Title IX prohibits discrimination based on sex in education programs receiving federal financial assistance.

[5]              Section 504 prohibits discrimination against qualified individuals with disabilities in programs receiving federal funding.