Introduction
Ever since the President issued his executive order targeting Diversity, Equity, and Inclusion (DEI) practices, there has been an intense effort to understand what, exactly, constitutes so-called “illegal DEI” in 2025. Congress has passed no new antidiscrimination laws, and no federal agency has issued binding regulations reinterpreting existing laws. But it is clear the administration intends to push the law in new directions. On July 29, 2025, the administration released another important insight into the administration’s priorities, and the kinds of DEI policies they may seek to turn into test cases and potentially eventual policy.
On July 29, 2025, U.S. Attorney General Pam Bondi issued a memorandum titled “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination” (the AG Memo). The AG Memo uses strong language when characterizing DEI programs, and offers “’Best Practices’ as non-binding suggestions” to guide companies “avoid legal pitfalls.”
At first glance, the AG Memo appears to mark a significant shift in federal enforcement posture toward related to Diversity, Equity, and Inclusion (DEI) programs, given its more detailed discussion of specific practices and policies than previous current administration guidance, such as the Equal Employment Opportunity Commission (EEOC)’s March 2025 FAQ on “‘What You Should Know About DEI-Related Discrimination at Work.”’ However, a closer reading reveals that many of the practices the AG Memo described as potentially unlawful have long been recognized as discriminatory under existing law. The AG Memo joins other pronouncements from the Deputy Attorney General, the head of the DOJ’s Civil Division, and the Chair of the EEOC. In each, the current administration has signaled that it plans to prioritize investigating and combatting many common DEI practices. However, none of the guidance changes antidiscrimination laws. Indeed, the AG Memo is clear that its “suggestions” are “not mandatory requirements but rather practical recommendations to minimize the risk of violations.” Accordingly, the AG Memo should be parsed carefully to gauge where it is signaling potential liability versus where it is speaking to the administration’s policy preferences.
Who is Impacted by the AG Memo
The AG Memo is addressed to all recipients of federal funding, though, most of the examples included in the memo are specific to educational institutions. The AG Memo also encourages scrutiny of third-party contractors and grantees, suggesting that companies indirectly connected to federal funding may also be affected. However, the AG Memo uses language apparently addressing a broad audience, including private employers, among other organizations and government bodies. What has become clear is that the administration is watching the reaction to its pronouncements and guidance, and has been and we expect will continue to be vocal about whether companies are reacting sufficiently and acting to skirt enforcement scrutiny.
While we expect the AG Memo to be persuasive across the administration, it is important to bear in mind that the limitations of the Department of Justice’s (DOJ)’s jurisdiction to the DOJ generally does not take the lead (or, in some cases, even have jurisdiction) to enforce federal civil rights laws discussed in the AG Memo, especially against private companies. This may help explain why so many of the specific examples in the AG Memo are specific to entities over which DOJ has jurisdiction. Companies can anticipate DOJ will prioritize using its resources and jurisdiction broadly, and will coordinate with other agencies like the EEOC and file amicus briefs in private litigation. But where DOJ does not have primary responsibility over an area of law or sector, the AG Memo is more of a statement of views than a commitment of agency resources. The Memo cites Title VI and Title VII of the Civil Rights Act of 1964, as well as Title IX of the Education Amendments of 1972 and the Equal Protection Clause of the 14th Amendment. However, while the DOJ can enforce Title VI, which prohibits discrimination on the basis of race, color, or national origin in programs and activities that receive federal financial assistance, it can only do so against private companies that receive federal financial assistance. The EEOC has the exclusive power to enforce Title VII, which prohibits employment discrimination based on race, color, religion, sex, or national origin, against private employers. However, the DOJ can launch investigations into private companies’ employment practices. Additionally, Section 1981, which prohibits racial discrimination in contracting, is enforced by individuals only, not any federal agency. Thus, while the DOJ may intervene in private litigation or file amicus briefs, it does not have unilateral authority to redefine what constitutes unlawful discrimination under Title VII or Section 1981.
However, despite obvious limitations for certain enforcement avenues, companies will be well advised to consider the implications, takeaways and action items that emerge from careful analysis of the AG Memo.
Key Takeaways
A. “Illegal DEI” Practices and Their Context
The AG Memo is more explicit and expansive than prior guidance in identifying specific DEI programs as potentially unlawful. It can be read as suggesting that companies avoid such programs as a practical consideration to avoid DOJ and other regulatory or agency scrutiny. However, it repeatedly qualifies that these practices are only illegal if they involve discriminatory intent or effect. The government does not claim that the cited examples – such as “safe spaces” for specific racial groups and “diverse slate” hiring requirements – are per se illegal; ,but rather, contends that such practices may be unlawful if implemented in a way that results in disparate treatment. Accordingly, companies may want to continue to evaluate their DEI programs from the perspective of potential liability under the law, and from the perspective of risk, which can be broader. This approach to the law is nothing new, and is consistent with longstanding Title VI and Title VII jurisprudence.
B. Use of Proxies
The AG Memo warns against using facially neutral criteria – such as requiring job applicants to demonstrate “cultural competence” or targeting specific geographic areas for recruitment – that function as proxies for explicit consideration of race, sex, or other protected characteristics. This takes aim at efforts to revise diversity programs away from protected characteristics in favor of socioeconomic and other metrics. It is also likely a warning against doing “DEI in secret,” which was also a focus in a recent House Judiciary Subcommittee hearing. However again, the AG Memo clarifies that these are only “legally problematic” when they are implemented with the intent to advantage or disadvantage individuals based on protected characteristics, which is consistent with longstanding Title VII case law. Courts have recognized that such proxies can be unlawful if applied with discriminatory intent, but absent evidence of such intent or of disparate impact on a group, the use of these criteria is not inherently unlawful. (The disparate impact theory is unlikely to be pursued by this administration, given it stated in an April executive order its goal of eliminating disparate impact liability, but the jurisprudence and the possibility of private litigation based on the theory still exists.)
C. Hostile Work Environment Claims
The AG Memo suggests that certain DEI trainings may create a hostile work environment, particularly if the trainings stereotype or demean individuals based on race or sex. The AG Memo specifically highlights examples that might stereotype white people and men, citing the statements “all white people are inherently privileged” and “toxic masculinity” as potentially creating a hostile work environment. However, these descriptions likely do not resemble most companies’ workplace training curricula. Indeed, the AG Memo acknowledges that trainings aimed at preventing discrimination that “do not single out particular groups as inherently racist or sexist” are permissible. This is consistent with recent case law, which emphasizes that tone matters in these trainings. For example, in Diemert v. City of Seattle, 2025 WL 446753, the court found that exposure to material discussing race does not by itself create a hostile work environment. In De Piero v. Pennsylvania State Univ., 711 F. Supp. 3d 410 (E.D. Pa. 2024), the court found that programs and trainings on concepts such as “white privilege,” implicit bias and critical race theory can be positive contributions to the workplace, depending on “the way these conversations are carried out.” The key factor is whether the training is presented in a way that ascribes negative traits to certain groups “without exception and as flowing inevitably from” a protected characteristic like race or gender. Id.
D. Unclear Legal Bases
In some cases, DOJ appears to blend or stretch legal concepts. For example, the AG Memo suggests that sex-based selection in contracting may be unlawful, but does not indicate what statute would prohibit it. Section 1981 prohibits discrimination in contracting, but only on the basis of race, not gender. Similarly, its discussion of Title IX and sex-separated spaces applies only to educational institutions, yet the AG Memo does not always make this distinction clear.
Key Practical Takeaways for Companies
In light of the AG Memo and ongoing enforcement developments, companies may wish to consider the following steps:
- Review hiring, promotion, and contracting criteria to ensure they are based on objective, job-related qualifications.
- Audit company practices, policies and programs for potential legal risks, particularly those involving eligibility restrictions or mandatory training. Keep the audit close at hand; as more guidance, and potentially enforcement, emerges, it may be necessary or desirable to continue to review the status of practices, policies and programs in light of emerging policy.
- Include nondiscrimination clauses in contracts with third parties and monitor compliance.
- Establish clear anti-retaliation policies and reporting mechanisms.
- Review oversight lines and consider whether, in light of emerging information, whether oversight should be changed or augmented within the company and at the Board level.
Conclusion
The AG Memo reflects the DOJ’s current enforcement priorities but does not change the underlying law. Many of the practices flagged in the AG Memo are only unlawful under specific circumstances that have long been recognized by courts. Companies need not respond to this guidance with undue alarm, but can take this opportunity to review their DEI programs for legal compliance and to ensure they are grounded in objective, nondiscriminatory principles. By doing so, businesses can mitigate legal risk while continuing to be true to their values.
