On July 30, 2025, the US Department of Justice (DOJ) issued a memorandum providing updated guidance for recipients of federal funding on identifying and avoiding unlawful discriminatory practices. This memorandum builds upon documents previously released by the Department of Education in February 2025 regarding diversity in higher education. It underscores that any entity receiving federal funds must fully comply with federal law, which prohibits discrimination based on race, color, national origin, sex, religion, and other protected characteristics—regardless of a program’s “labels, objectives, or intentions.”
The DOJ specifically included guidance to shed light on federal antidiscrimination laws found in certain diversity, equity, and inclusion (DEI) programs. The memorandum also clarifies that the listed “Best Practices” are “non-binding suggestions” intended to help entities avoid legal risk. Educational institutions are explicitly identified in the memorandum as recipients of federal financial assistance, and many of the examples provided are particularly relevant to educational institutions.
In the memorandum, the DOJ states that the following campus activities and practices are unlawful and discriminatory:
- Race-Based Scholarships or Programs: An example is when a “university’s DEI program establishes a scholarship fund exclusively for students of a specific racial group” and excludes otherwise qualified applicants of other races.
- Preferential Hiring or Promotion Practices: It is unlawful when a federally funded entity’s DEI policy “prioritizes candidates from ‘underrepresented groups’ for admission, hiring, or promotion,” especially when this prioritization bypasses other qualified candidates who are not within those groups.
- Access to Facilities or Resources Based on Race or Ethnicity: The memorandum provides the example of a “safe space” or “lounge” used exclusively for students in a particular racial or ethnic group as unlawful preferential treatment.
- Race-Based Training Sessions: The memorandum cites an example where a “federally funded university hosts a DEI training program that requires participants to separate into race-based groups (e.g., ‘Black Faculty Caucus’ or ‘White Ally Group’) for discussions, prohibiting individuals of other races from participating in specific sessions.”
- Segregation in Facilities or Resources: An example includes a “BIPOC-only study lounge” that is “technically open to all” but facially discouraging access by students of other races, which may create a “hostile environment.” However, this does not apply to sex-separated facilities designed to protect privacy, such as “restrooms, showers, or locker rooms, or lodging.”
- Implicit Segregation Through Program Eligibility: The memorandum highlights concern with programs that require participants to identify with a specific racial or ethnic group or mandate sex-specific eligibility (e.g., “for underrepresented minorities only”) or “mandates sex-specific eligibility,” describing these criteria as “effectively excluding others who meet objective program criteria.”
- Race-Based “Diverse Slate” Policies in Hiring: An example includes a federally funded research institute requiring “all interview slates for faculty positions [to] include a minimum number of candidates from specific racial groups,” thus rejecting other qualified candidates who are not in a particular racial or ethnic group.
- Sex-Based Selection for Contracts: The memorandum points to a federally funded state agency that utilizes a “DEI policy that prioritizes awarding contracts to women-owned businesses, automatically advancing female vendors or minority-owned businesses over equally or more qualified businesses without preferred group status.” This selection process includes any contract selection process that uses “sex or race as a tiebreaker” or “primary criterion, such as favoring ‘minority- or women-owned’ businesses” without satisfying the appropriate level of judicial scrutiny.
- Race- or Sex-Based Program Participation: Programs that require “50% of selected participants be from ‘underrepresented racial groups’” or that use race, sex, or other protected characteristics as selection criteria, even “if framed as addressing underrepresentation.”
- Trainings That Promote Discrimination Based on Protected Characteristics: For instance, a federally funded school district might mandate DEI training for teachers that includes statements such as “all white people are inherently privileged” and “toxic masculinity.” Such training could potentially violate federal antidiscrimination laws if it fosters a hostile environment.
The DOJ states that the following campus activities may be considered potentially unlawful and discriminatory:
- “Cultural Competence” Requirements: The memorandum points to a “federally funded university requiring job applicants to demonstrate ‘cultural competence,’ ‘lived experience,’ or ‘cross-cultural skills’” to analyze an applicant’s background in lieu of their qualifications as an example of potentially unlawful proxy.
- Geographic or Institutional Targeting: Examples include a federally funded organization implementing recruitment strategies that target “geographic areas, institutions, or organizations chosen primarily because of their racial or ethnic composition rather than other legitimate factors.”
- “Overcoming Obstacles” Narratives or “Diversity Statements”: Examples include a statement where an applicant would have to describe the “obstacles they have overcome” or submit a “diversity statement” that benefits those with experiences tied to a protected characteristic thus utilizing the narrative for gaining advantages.
The memorandum concludes with non-binding best practices recommendations to help entities, including educational institutions, comply with federal law:
- Ensure all programs, activities, and resources are open to qualified individuals. For example, “avoid organizing groups or sessions that exclude participants based on protected traits.”
- Base selection decisions on skills and qualifications relevant to program participation. Avoid using criteria like “first-generation status” or “geographic diversity” if they serve as proxies for protected characteristics.
- Eliminate programs that may lead to discriminatory outcomes. For example, a scholarship initiative should avoid prioritizing “underserved geographic areas” or “first-generation students” if the underlying intent is to boost participation among particular racial or sex-based groups.
- When making decisions related to hiring, promotion, or contract selection, ensure there are “legitimate rationales unrelated to race, sex, or other protected characteristics.” The memorandum also advises to “ensure these rationales are consistently applied” and not connected to any discriminatory objectives.
- Scrutinize seemingly neutral criteria for potential “proxy effects.”
- Evaluate all applicants based on merit and discontinue performance metrics that mandate representation of specific protected groups.
- Ensure training programs are inclusive and open to all qualified individuals. Be sure these trainings do not require individuals to “affirm specific ideological positions.”
- Incorporate explicit nondiscrimination language into “grant agreements, contracts, or partnership agreements, requiring third parties to comply with federal law.” The memorandum also states that it is important to “specify that federal funds cannot be used for programs that discriminate based on protected characteristics.” Further, it is important that these third parties are continually monitored for ongoing compliance.
- Establish clear antiretaliation procedures and safe reporting mechanisms and include these policies in student codes.
The memorandum ends by encouraging all federally funded entities to review their programs and policies to ensure full compliance with federal antidiscrimination laws.
If you have any questions regarding the content of this alert, please contact Buster Melvin, Higher Education Team co-leader, at emelvin@barclaydamon.com; Chloe Shortz, associate, at cshortz@barclaydamon.com; or another member of the firm’s Higher Education Team.