The U.S. Attorney General recently published a memorandum entitled “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination.” This memorandum provides employers with much-needed guidance regarding what this administration considers “illegal DEI,” providing suggestions and guidance on how federal anti-discrimination laws apply to DEI programs, regardless of whether they are labeled “DEI” or called something else.

This guidance applies to federal agencies and recipients of federal funding, including situations where unlawful practices are knowingly funded through contractors, grantees, or other third parties. However, all employers should evaluate their own DEI programs with this guidance in mind. 

Examples of “illegal DEI” practices identified in the memorandum include:

Granting Preferential Treatment Based on Protected Characteristics

This includes providing opportunities, benefits, or advantages based on protected characteristics in a way that disadvantages other qualified individuals. Examples include race-based scholarships or programs; preferential hiring or promotion for “underrepresented groups”; or limiting access to facilities or resources based on race or ethnicity (e.g., designating a location as a “safe space” for a specific protected group).

Prohibited Use of Proxies for Protected Characteristics

 Described as using neutral criteria that function as substitutes for considering race, sex, or other protected characteristics. Examples provided include: “cultural competence” requirements (such as requiring “lived experience” as a job qualification), geographic or institutional targeting (focusing on geographic areas based on their racial or ethnic makeup), requiring applicants to describe “obstacles they have overcome” or submit a diversity statement that advantages those with experiences tied to protected characteristics.

Segregation Based on Protected Characteristics

This involves organizing resources or programs in a way that separates individuals on the basis of protected characteristics. Provided examples include race-based training sessions, segregation in facilities or resources, and implicit segregation through program eligibility (e.g., requiring participants in a DEI-focused workshop to meet certain identity-based criteria, effectively excluding others). The guidance specifically excludes maintaining sex-separated athletic competitions and intimate spaces from this category of unlawful practices.

Unlawful Use of Protected Characteristics

This includes race-based “diverse slate” policies in hiring (e.g., requiring a minimum number of candidates from particular groups), sex-based selection for contracts (e.g., prioritizing awarding contracts to women-owned businesses), race-based or sex-based program participation (even if it is framed as addressing underrepresentation).

Training Programs that Promote Discrimination or Hostile Environments

This includes training that stereotypes, excludes, or disadvantages individuals based on protected characteristics, or that creates a hostile environment. Examples include statements such as “all white people are inherently privileged” or labeling certain traits as “toxic masculinity.”

The DOJ has provided the following list of best practices:

• Ensure inclusive access to all workplace programs, activities and resources
• Focus on skills and qualifications related to job performance or program participation
• Prohibit demographic-driven criteria
• Document legitimate rationales for employment decisions
• Scrutinize neutral criteria for proxy effects
• Eliminate diversity quotas
• Avoid exclusionary training programs
• Include nondiscrimination clauses in contracts to third parties and monitor compliance
• Establish clear anti-retaliation procedures and create safe reporting mechanisms (and include them in employee handbooks, student codes of conduct, and program guidelines).

As expected, scrutiny of DEI programs continues and the administration’s focus on “illegal DEI” remains a priority. Employers should proactively audit their policies and practices with the assistance of legal counsel to identify and mitigate potential risks.

To read the original client alert published by Ally Law’s New York member firm, Ellenoff Grossman & Schole LLP, please click here.