DOJ Issues New Guidance on DEI Programs for Federal Fund Recipients
On July 29, 2025, Attorney General Pam Bondi released a nine-page memorandum titled “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination” (“DOJ DEI Memo”).[1] Although characterized as “non-binding,” the DOJ DEI Memo provides supplemental guidance[2] on the Department of Justice’s current interpretation of federal antidiscrimination laws as applied to diversity, equity, and inclusion programs.
Key Takeaways
At a high level, the DOJ DEI Memo sets forth the following positions:
- Labels Don’t Excuse Liability: Using terms like “DEI” or “equity” do not excuse unlawful discrimination or protect a program from legal scrutiny.
- Protected Characteristics Cannot Be Used as Criteria: Basing decisions on race, sex, or other protected characteristics—whether for hiring, admissions, or resource allocation—is generally unlawful, except in rare cases where such discrimination satisfies the relevant level of judicial scrutiny.
- Importance of Sex-Separated Spaces and Sports: Forcing employees to share intimate spaces with the opposite sex or allowing men to compete in women’s sports is typically unlawful.
- Neutral Criteria Can Still Be Considered Unlawful Proxy Discrimination: Using facially neutral criteria like “cultural competence” or “lived experience” may violate federal law if designed or applied with the intention of advantaging or disadvantaging groups based on protected characteristics.
- Third-Party Risks: Institutions are responsible for ensuring federal funds do not support third-party programs that discriminate.
- Retaliation is Prohibited: Employees are legally protected from adverse actions if they object to or refuse to participate in discriminatory trainings or practices.
The following sections examine several of these positions in greater detail, with a focus on how they may affect common policies and practices of higher education institutions.
Prohibition on Using Protected Characteristics
The DOJ DEI Memo states, “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.”[3] Examples of unlawful practices referenced in the Memo include:
- A university DEI program establishing a scholarship fund exclusively for students of a specific racial group (e.g., “Black Student Excellence Scholarship”) that “excludes otherwise qualified applicants of other races, even if they meet academic or financial need criteria.”[4]
- Designating a “safe space” or “lounge exclusively for students of a specific racial or ethnic group”—for example, a “BIPOC-only study lounge” that, even if technically open to all, signals identity-based exclusion and may foster a hostile environment.”[5]
These examples depart from previous guidance. In the past, an argument could be made that a scholarship fund or shared space that was open to all students was acceptable regardless of what it was named. Under the DOJ’s current view, the “perception of segregation”—like intent, as discussed below—can be enough to trigger scrutiny.
Unlawful Proxy Discrimination
Cultural competence, lived experience, overcoming obstacles
The DOJ DEI Memo puts intent front-and-center in its discussion of unlawful proxy discrimination: “Facially neutral criteria (e.g., ‘cultural competence,’ ‘lived experience,’ geographic targeting) that function as proxies for protected characteristics violate federal law if designed or applied with the intention of advantaging or disadvantaging individuals based on protected characteristics.”[6] Criteria may be “legally problematic” if they:
- Are selected because they correlate with, replicate, or are used as substitutes for protected characteristics; or
- Are implemented with the intent to advantage or disadvantage individuals based on protected characteristics.[7]
Potentially unlawful proxies include “cultural competence” requirements, “overcoming obstacles” narratives, or “diversity statements” that advantage those whose experiences are intrinsically tied to protected characteristics.[8]
Intent is notoriously difficult to prove, leaving institutions with uncertainty about whether a legitimate holistic approach might nevertheless be challenged as disguised discrimination. The DOJ DEI Memo pushes far beyond the Supreme Court’s decision in Students for Fair Admissions, Inc. v. President and Fellows of Havard College, which left open the possibility of the very narratives that the DOJ DEI Memo rejects as illegal:
“[A]s all parties agree, nothing in this opinion should be construed as prohibiting universities from considering an applicant’s discussion of how race affected his or her life, be it through discrimination, inspiration, or otherwise. . . . A benefit to a student who overcame racial discrimination, for example, must be tied to that student’s courage and determination. Or a benefit to a student whose heritage or culture motivated him or her to assume a leadership role or attain a particular goal must be tied to that student’s unique ability to contribute to the university. In other words, the student must be treated based on his or her experiences as an individual—not on the basis of race.”[9]
It is an impossibly fine distinction to say that an institution may consider an applicant’s narrative about how race has shaped his or her life (as permitted under SFFA) while simultaneously prohibiting consideration of that narrative as a “proxy” because it is “intrinsically tied to protected characteristics.”
Geographic or institutional recruitment strategies
The DOJ DEI Memo identifies “geographic or institutional targeting” as potentially unlawful where recruitment strategies are “chosen primarily because of their racial or ethnic composition [of the target area or institution] rather than other legitimate factors.”[10] This interpretation represents a shift both in how geography is viewed and in how recruitment is regulated. Under previous (now rescinded) guidance issued by the Biden Administration, institutions were encouraged to “redoubl[e] efforts to recruit and retain talented students from underserved communities, including those with large numbers of students of color.”[11] Because SFFA focused on admissions, recruitment and pipeline programs framed around geographic diversity were previously considered acceptable.
Under the DOJ DEI Memo, such programs are “illegal DEI” if their intent is to influence the demographic composition of the class. As Inside Higher Ed noted, “This interpretation of federal law could present new challenges for colleges that have relied on tactics like place-based recruitment to create diverse student bodies since the Supreme Court banned affirmative action in 2023. For instance, some colleges have guaranteed admission to students who graduate in the top 10 percent of their high schools.”[12]
Scholarship programs
The DOJ DEI Memo also states that “any program—such as scholarships, fellowships, or leadership initiatives—that uses race, sex, or any other protected characteristic as a selection criterion, even if framed as addressing underrepresentation” is unlawful.[13] It further provides that criteria like socioeconomic status, first-generation status, or geographic diversity cannot be used if selected with an intent to prioritize individuals based on racial, sex-based, or other protected characteristics.”[14]
This interpretation appears to rule out the possibility that facially neutral criteria that produce outcomes that disproportionately benefit individuals with protected characteristics could ever be permissible. The DOJ DEI memo states that institutions can use “academic merit or financial hardship, applied without regard to protected characteristics or demographic goals,”[15] but if those criteria result in increased participation by underrepresented groups, institutions may have difficulty proving that such criteria were not selected with that intent.
Navigating the Road Ahead
The DOJ DEI Memo’s broad interpretations and focus on intent create new compliance risks for higher education institutions. The following steps may help institutions prepare for potential inquiries and reduce legal exposure.
Establish Response Protocols
Institutions should be prepared for increased enforcement activity. The trend is already evident in recent investigations into institutions that used their own funds to support undocumented students or underrepresented minority students; such actions are now being scrutinized under Title VI for potential national origin discrimination.[16] In addition, qui tam relators filing complaints under the False Claims Act now have a clearer blueprint for identifying the types of “illegal DEI” programs the DOJ may pursue.[17] Responding to such complaints and investigations would in and of itself be incredibly burdensome to an institution. Institutions should have clear response protocols, including identifying key personnel, in the event of a federal inquiry.
Document Legitimate Rationales
The DOJ DEI Memo instructs entities to “Document Legitimate Rationales” that are “unrelated to race, sex, or other protected characteristics”[18] and to “[e]nsure these rationales are consistently applied and are demonstrably related to legitimate, nondiscriminatory institutional objectives.”[19] Although there may be a tendency to want to conduct such reviews under privilege, institutions should be prepared to have non-privileged evidence establishing mindset and intent behind neutral adopted policies.
The focus on intent—as well as the element of scienter, or knowledge of falsity, required under the False Claims Act—means that institutions must be prepared for complaints and potential investigations that would open the door to government review of any documents that could point to intent, including personal emails, meeting minutes, and internal process materials. Staff should receive clear training and reminders on properly documenting legitimate, nondiscriminatory rationales, including where and how such documentation should be maintained.
Expand the Scope of Review
Many institutions have already reviewed or are actively reviewing areas that may have considered race or other protected characteristics, such as admissions, scholarships, or hiring. The scope of review should be revisited and possibly expanded to include the areas of focus identified in the DOJ DEI Memo, including scholarship funds or safe spaces named after groups with protected characteristics (even if the funds or spaces are open to all), geographic recruitment strategies, and third-party initiatives such as preferred vendor programs.
HMBR’s Higher Education Group continues to monitor this issue. If you have questions about the impact of the DOJ DEI Memo on your institution’s specific programs and activities or require assistance in conducting a risk assessment or developing response strategies, please contact us via email or by phone at 312-946-1800.
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