DOJ Memo Signals Stricter Scrutiny of DEI Federal Funding Practices

US Attorney General Pam Bondi issued a memorandum on July 29, 2025, titled “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination,” reaffirming the administration’s critical view of certain diversity, equity, and inclusion (DEI) practices.

The memo targets educational institutions, public agencies, and private organizations receiving federal funds, but its implications extend to private-sector employers, as Christopher Wilkinson and Emily Edwards of Perkins Coie explain in an article on the firm’s website.

The memo reiterates that using protected characteristics in employment, program participation, or resource allocation is unlawful. It cautions that even neutral criteria, such as “cultural competence” or “lived experience,” may violate the law if they serve as proxies for discrimination. 

Examples of potentially unlawful practices include race-limited scholarships, preferential hiring based on protected traits, race- or sex-based training, and “diverse slate” hiring policies. The memo also questions supplier diversity programs prioritizing women- or minority-owned businesses and raises concerns over identity-focused facilities and resource groups, suggesting they could create perceptions of segregation.

While the DOJ lists “best practices,” such as prioritizing skills and qualifications, documenting nondiscriminatory rationales, and avoiding diversity quotas, some recommendations, particularly scrutiny of neutral criteria for proxy effects, raise compliance uncertainties. The guidance aligns with March’s joint DOJ-EEOC memo but introduces broader interpretations that may challenge established workplace diversity efforts.

Recipients of federal funding should reassess DEI programs, especially hiring, training, and vendor selection criteria, to ensure alignment with federal guidance. Given that courts, not agencies, ultimately define liability under key antidiscrimination statutes, employers should work closely with counsel to navigate the memo’s ambiguities and mitigate potential enforcement risks.