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DOJ Guidance Identifies Unlawful DEI Policies and Best Practices

It has been quite a year for employers trying to navigate the Trump Administration’s executive orders related to DEI programs. The DOJ has issued a memorandum titled “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination.” The memorandum echoes other Trump Administration memoranda and executive orders emphasizing that employers must ensure their 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, regardless of the program’s labels, objectives or intentions. The memorandum also identifies specific unlawful practices for employers still wondering how to navigate the Administration’s enforcement priorities.

Proxy Discrimination

Notably, the memorandum addresses prohibited uses of proxies for protected characteristics. Unlawful proxies exist when a federally funded entity intentionally uses neutral criteria that function as substitutes for considerations of race, sex or other protected characteristics. Although these policies may appear to be facially neutral, they become problematic if they correlate with, replicate or substitute for protected characteristics, or they are used to advantage or disadvantage individuals based on protected characteristics.

Examples of potentially unlawful proxies:

• Requiring applicants to demonstrate “cultural competence,” “lived experience” or “cross-cultural skills” in ways that evaluate racial or ethnic backgrounds rather than objective qualifications.
• Implementing recruitment strategies that target specific geographic areas, institutions or organizations because of their racial or ethnic composition, rather than legitimate factors.
• Requiring applicants to describe “obstacles they have overcome” or submit a “diversity statement” in a manner that advantages those who discuss experiences intrinsically tied to protected characteristics.

Segregation Based on Protected Characteristics

The memorandum also defines and discusses unlawful segregation, which occurs when a federally funded entity organizes programs, activities or resources in a way that separates or restricts access based on race, sex or other protected characteristics.  While compelled segregation is impermissible except in extremely rare circumstances, the memorandum states, “to safeguard the rights of women and girls, organizations should affirm sex-based boundaries rooted in biological differences,” such as in bathrooms and locker rooms.

Unlawful Use of Protected Characteristics

The memorandum reminds employers that federally funded entities cannot consider race, sex or any other protected trait as a basis for selecting candidates for employment. The memorandum explains that this includes policies that explicitly mandate representation of specific groups in candidate pools or implicitly prioritize protected characteristics through selection criteria.  For example, employers are prohibited from requiring all interview slates for positions to include a minimum number of candidates from specific racial groups, or from offering scholarships, fellowships, internships or leadership initiatives based on a protected characteristic.

Third-Party Funding

The memorandum also provides that recipients of federal funds should ensure that federal funds do not support third-party programs that discriminate based on a protected characteristic.

Best Practices

The memo provides a list of recommended best practices for recipients of federal funds:

1. Ensuring inclusive access to all workplace programs, activities and resources regardless of race, sex or other protected characteristics, and avoiding the organization of groups or sessions that exclude participants based on protected traits.
2. Focusing on skills and qualifications directly related to job performance or program participation, for example, emphasizing language proficiency and relevant educational credentials rather than socioeconomic status, first-generation status or geographic diversity.
3. Prohibiting demographic-driven criteria designed to achieve discriminatory outcomes, even through facially neutral means, and instead using universally applicable criteria such as academic merit or financial hardship, applied without regard to protected characteristics or demographic goals.
4. Documenting legal rationales when using criteria in hiring, promotion or contract selection that might correlate with protected characteristics.
5. Scrutinizing neutral criteria to determine whether they operate as proxies for protected characteristics.
6. Eliminating diversity quotas and focusing on nondiscriminatory performance metrics.
7. Avoiding exclusionary training programs.
8. Including nondiscrimination clauses in contracts with third parties and monitoring compliance.
9. Establishing clear anti-retaliation procedures and creating safe reporting mechanisms that prohibit retaliation against individuals who raise concerns or refuse to participate in potentially discriminatory programs.

While the memorandum is not binding law, it provides further clarity on the Department of Justice’s enforcement priorities. Employers should evaluate their policies to ensure their practices align with the memorandum’s best practices and all applicable antidiscrimination laws. Please feel free to contact us for guidance in navigating this sensitive area.