DOJ Provides Insight Into Unlawful Discriminatory Practices, Highlighting Enforcement Risks for Federal Funding Recipients

The Guidance recognizes that it is non-binding, stating “these are not mandatory requirements but rather practical recommendations to minimize the risk of violations.” However, the Guidance is a significant indication as to how DOJ will conduct investigations and enforcement actions related to DEI, including under the FCA. The Attorney General’s February 5, 2025 memorandum (“Ending Illegal DEI and DEIA Discrimination and Preferences”) advised that DOJ will “investigate, eliminate, and penalize” DEI initiatives and practices among entities that receive federal funds. DOJ’s Civil Rights Fraud Initiative, announced in May 2025, seeks to use the FCA — a civil fraud statute that imposes treble damages and penalties on violators — to redress knowing violations of civil rights laws by federal funding recipients. The Guidance offers insights into areas of potential focus for DOJ.

Significantly, although the Guidance is specifically directed to recipients of federal funding, the memorandum makes broad statements about what conduct is “unlawful” or “potentially unlawful” under federal anti-discrimination laws, and private employers should anticipate it will be interpreted expansively by DOJ. Federal contractors and recipients of federal funding face heightened risks of potential enforcement under the FCA, but the Guidance has broader implications, as it makes reference to entities “that are otherwise subject to federal anti-discrimination laws” and suggests “public and private employers, should review [the Guidance] carefully to ensure all programs comply with their legal obligations.”

The Guidance states that any practices that rely on classification based on protected characteristics — including race, color, religion, sex, and national origin — violate federal anti-discrimination laws because such practices create unequal treatment or disadvantage otherwise qualified candidates based on protected categories. Examples of “unlawful discriminatory policies and practices” according to DOJ include: (1) preferential treatment based on protected characteristics; (2) use of proxies for protected characteristics; (3) segregation based on protected characteristics; and (4) training programs that promote discrimination or hostile environments.

The Guidance highlights that facially neutral policies implemented with the intent to advantage or disadvantage individuals based on protected categories “become legally problematic” when they correlate with, replicate, or are used as substitutes for protected characteristics. For instance, according to the Guidance, looking for job candidates to have “cultural competence,” “lived experience,” or “cross-cultural skills” may violate equal protection laws because these terms may be used to facilitate DEI-driven missions, even without explicitly stating so.

The Guidance also asserts that recruitment strategies that target specific geographic areas, institutions or organizations may constitute unlawful discrimination. The Guidance makes clear that, according to DOJ, racial quotas, where an organization seeks to have a certain number or percentage of applicants or team members come from a specific protected group, are prohibited. Further, in line with the EEOC technical assistance documents, the Guidance identifies “diverse slate” policies in hiring as problematic. Discussing the use of proxies for protected characteristics, the Guidance explains, “Criteria like socioeconomic status, first-generation status, or geographic diversity must not be used if selected to prioritize individuals based on racial, sex-based, or other protected characteristics.”

The Guidance also discusses “unlawful segregation,” described as any program, activity, or resources that restrict access based on any protected characteristic. Examples provided include “segregation in facilities or resources” because of a protected trait, such as, according to DOJ, race-based training sessions or a “BIPOC-only student lounge.” As to the lounge example, the Guidance states that even if students of any race could enter the area, the name on its face creates a “perception of segregation” and therefore may “foster a hostile environment.” Of note, the EEOC technical assistance touches on a similar concept and states that, in the context of workplace DEI programs, unlawful segregation can include “limiting membership in workplace groups, such as Employee Resource Groups (ERG), Business Resource Groups (BRGs), or other employee affinity groups, to certain protected groups.” DOJ thus encourages employers to consider the potential impact the name of such group could have, even if open to all.

Notably, the Guidance indicates DOJ’s view that while segregation is generally impermissible, failing to maintain sex-separated intimate spaces — such as bathrooms, showers, locker rooms, and dormitories — undermines safety, privacy, and equal opportunity for women.

Takeaways

While non-binding, the Guidance gives employers a more detailed view of the lens through which DOJ and other federal agencies will enforce anti-discrimination laws as applicable to policies and practices that aim to facilitate diversity, equity and inclusion. Purportedly to “assist entities in avoiding legal pitfalls and upholding equal opportunity for all,” the Guidance encourages entities to avoid the use of demographic criteria related to protected characteristics, regardless of the intention of the policy or program. It encourages all entities to ensure that they are not using facially neutral means as a proxy for unlawful DEI efforts. The Guidance further suggests entities document any non-discriminatory rationales used in hiring, promoting, or selecting candidates.

Please reach out to your Vinson & Elkins team to discuss the potential impacts of the Guidance on your business and how you should be addressing these developments.