On July 29, the Office of the U.S. Attorney General issued a memorandum that offers additional color respecting unlawful discrimination, which President Trump originally characterized as “illegal DEI” in his January 2025 executive order. While ostensibly directed to recipients of federal funding, the memorandum affords insight for employers generally, by highlighting specific examples of diversity, equity, and inclusion (DEI) practices with which the administration takes issue. It also offers “non-binding suggestions” for entities to avoid legal liability.
Understanding the DOJ’s Position on Illegal DEI Initiatives
Echoing a prior Department of Justice (DOJ) memorandum, as well as a technical assistance document from the Equal Employment Opportunity Commission (EEOC) that Venable previously assessed here, the attorney general’s recent memorandum states that DEI programs may violate federal law if they discriminate on the basis of an individual’s protected characteristics, including race, national origin, and sex.
Unlawful “Preferential Treatment”
The memorandum notes that “preferential treatment” based on protected characteristics is unlawful, except in extremely narrow circumstances. Among other practices, the memorandum cites as problematic:
- “Race-based scholarships or programs,” including mentorship or internship programs, that either include or exclude qualified individuals based on their race
- “Diverse slate” selection practices, which set quotas for candidates from particular protected groups
- General preferences for individuals from “underrepresented groups”—including preferences in vendor and contractor selection—where “underrepresented groups” are defined by particular protected characteristics
Impermissible Proxies for Race and Other Protected Characteristics
Taking clear aim at entities that might seek to use neutral criteria to circumvent this prohibition, the memorandum focuses at length on what it terms “unlawful proxies” for preferences based on protected characteristics. It emphasizes that an entity’s use of such neutral criteria—like an individual’s “cultural competence,” “lived experience,” or efforts to overcome adversity—will still be unlawful if they are designed to ultimately identify and then benefit individuals in particular protected groups.
The memorandum specifically calls out “socioeconomic status,” “first-generation status,” or “geographic diversity” as selection criteria that may invite scrutiny. It also plainly warns that efforts to recruit individuals from specific academic institutions or organizations because of their “racial or ethnic composition” would run afoul of antidiscrimination law.
If an entity uses selection criteria that could be viewed as a proxy for a protected characteristic—like preferencing individuals from a particular location, where residents are predominantly of a particular race—the memorandum suggests that it maintain a clear record of the legitimate and non-discriminatory reason for employing such criteria, to defend against any claims of discrimination.
Legal Boundaries for Sex-Segregated Spaces and Transgender Access
Despite generally decrying segregation of individuals based upon protected characteristics, the memorandum notes that “some sex separation is necessary where biological differences implicate privacy, safety, or athletic opportunity.” It indicates that “compelling employees to share intimate spaces with the opposite sex or allowing men to compete in women’s athletic competitions would typically be unlawful,” as such practices “undermine the privacy, safety, and equal opportunity of women and girls.”
In doing so, the memorandum echoes statements by Acting EEOC Chair Andrea Lucas, who has emphasized that antidiscrimination law does not require that transgender women be afforded access to single-sex restrooms and the like.
Actionable DEI-Related Trainings and Unlawful Retaliation
As was the case in the EEOC’s technical assistance document, the memorandum also emphasizes that entities cannot retaliate against individuals who oppose or refuse to participate in “discriminatory programs.” This would include employee and other trainings that “single out, demean, or stereotype individuals based on protected characteristics.”
It also notes that such trainings—which, by way of example, may refer to the concepts of white privilege or “toxic masculinity”—can create an actionable hostile work environment, depending upon their context and content. The memorandum further cautions that trainings must not “require participants to affirm specific ideological positions or ‘confess’ to personal biases or privileges” based on their membership in a particular protected group.
Potential Liability for Conduct of Third Parties
As is relevant to federal funding recipients in particular, the memorandum notes that those recipients may also be held liable for violating antidiscrimination law if they knowingly fund the unlawful activities of third parties. It indicates that funding recipients should monitor any materials, feedback, and outcomes from the third parties with which it interacts and terminate relationships with any that have been found to discriminate. The memorandum also cautions that federal funding recipients may also lose grant funding if they violate antidiscrimination law.
In light of the heightened scrutiny placed on DEI-related initiatives, employers with questions concerning the memorandum, their DEI-related practices, or their compliance with antidiscrimination law are encouraged to contact the authors of this article or any other member of Venable’s Labor and Employment Group.