On July 29, 2025, the Department of Justice (DOJ), under the second Trump administration, issued guidance addressing how Diversity, Equity, and Inclusion (DEI) programs can run afoul of federal anti-discrimination laws. Now that the guidance has been in effect for several weeks, employers and organizations are beginning to evaluate what it means for their existing policies and practices.
Although the guidance formally applies to employers and organizations that receive federal funding, its reasoning offers valuable insights for all other private employers as well. It explains the DOJ’s current enforcement stance on what it considers unlawful practices and includes a list of “Best Practices” aimed at helping organizations stay compliant and avoid legal risk.
Key Practices the DOJ Now Flags as Unlawful
The DOJ identified four categories of practices that it views as constituting DEI-related unlawful discrimination, offering real-world examples of each:
- Granting Preferential Treatment Based on Protected Characteristics, such as:
- race-based scholarships or programs
- preferential hiring or promotion practices
- access to facilities or resources based on race or ethnicity
- Use of Proxies for Protected Characteristics, such as:
- “cultural competence” requirements (e.g., job applicants must demonstrate “cultural competence,” “lived experience,” or “cross-cultural skills” that effectively evaluate candidates’ racial or ethnic backgrounds)
- geographic or institutional targeting (e.g., recruiting from specific geographic areas, institutions, or organizations because of their racial or ethnic composition, such as HBCUs)
- “overcoming obstacles” narratives or “diversity statements” (e.g., requiring applicants to describe obstacles they have overcome or submit diversity statements that advantage those who discuss experiences intrinsically tied to protected characteristics)
- Segregation Based on Protected Characteristics, such as:
- segregated training sessions (e.g., requiring participants to separate into race-based groups)
- segregation in facilities or resources (single-sex bathrooms, showers, and locker rooms are permissible when tied to biological sex)
- implicit segregation through program eligibility (e.g., programming open only to women)
- “diverse slate” policies in hiring (e.g., requiring a minimum number of candidates from specific racial groups, or that a certain percentage of finalists be from “diverse” backgrounds)
- sex-based selection for contracts (e.g., favoring minority- or women-owned businesses)
- programming using protected characteristics as a selection criterion
- Training Programs that Promote Discrimination or Hostile Environments by Stereotyping Protected Characteristics
DOJ’s Recommended Best Practices
While emphasizing that its guidance does not create new law, the DOJ included a set of non-binding “Best Practices” to minimize the risk of legal violations. These recommendations are also useful for employers that do not receive federal funding:
- Ensure inclusive access
- Focus on skills and qualifications
- Prohibit demographic-driven criteria
- Document legitimate rationales
- Scrutinize neutral criteria for proxy effects
- Eliminate diversity quotas
- Avoid exclusionary training programs
- Establish clear anti-retaliation procedures and create safe reporting mechanisms
Takeaways and Next Steps
In the weeks since its release, the guidance has sparked significant discussion among employment lawyers, HR professionals, and compliance officers. While the DOJ’s guidance is framed as non-binding for recipients of federal funding, all employers, regardless of funding status, should carefully review its recommendations, especially given that enforcement priorities at other federal agencies, such as the EEOC, increasingly include “DEI-related discrimination.”
Employers should also keep in mind that applicable state and local laws continue to apply with full force. In some cases, state or local laws may affirmatively encourage certain DEI efforts that could be questioned under federal law. Compliance efforts will therefore need to reconcile potentially conflicting obligations between federal, state, and local requirements.
See the full guidance here for more information.