On July 29, 2025, the Office of the U.S. Attorney General published its Memorandum for All Federal Agencies on the subject of “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination.” The Memorandum may be viewed here.
Summation of the Memorandum
Federal agencies risk revocation of grant funding and/or violation of law where the agency knowingly funds unlawful practices of contractors, grantees, and other third parties, such as (according to the Attorney General) race-based scholarships, DEI-employment initiatives, or activities that apply preferential treatment based on protected class status.
Non-Binding?
The Memorandum concludes by noting that it consists of merely “non-binding suggestions to assist entities in avoiding legal pitfalls and upholding equal opportunity for all.” However, all entities who in any way receive federal funds to advance programs, initiatives, or contracts are wise to carefully the guidance presented by the Attorney General.
A Building Block to Executive Orders
The Attorney General’s “guidance” is another building block on the U.S. President’s Executive Orders issued on January 20, 2025 that served to terminate all federal diversity, equity, and inclusion-type programs and funding for same. Those Executive Orders were the subject of my blog post of January 27, 2027 titled Executive Orders to End Federal Diversity, Equity, and Inclusion Programs, which may be viewed here.
The Attorney General’s more recent guidance makes clear that the law prohibits the use of federal funds, including federal grants to charities, universities, and contractors, for programs that offer preferential treatment based on protected class status, such as race, sex, or other protected class status.
Unlawful “Proxies”
The Attorney General further warns all federal agencies that activities that are “unlawful proxies” to camouflage unlawful preferential treatment likewise may run afoul of the law, the Attorney General’s guidance, and the President’s Executive Orders. In this regard, the Attorney General provided these examples of “unlawful proxies:”
- “Cultural Competence” Requirements – referring to a situation where a federally funded organization implements recruitment strategies targeting specific geographic regions, institutions, or organizations “primarily because of their racial or ethnic composition rather than other legitimate factors.”
- “Overcoming Obstacles” Narratives or “Diversity Statements” – referring to federally funded programs that requires applicants to describe “obstacles they have overcome” or to submit a “diversity statement” whereby the organization uses the responses “in a manner that advantages those who discuss experiences intrinsically tied to protected characteristics, i.e., using the narrative as a “proxy” for advantaging a protected characteristic.
Other examples of unlawful practices offered by the Attorney General included race-based training sessions, segregation in facilities or resources, implicit segregation through program eligibility.
Employment Law Revisited
In my blog post of January 27, 2027 titled Executive Orders to End Federal Diversity, Equity, and Inclusion Programs (linked above), I noted, No matter the “objective” basis or good intentions, employment decisions that use protected-class status as a motivating factor remain vulnerable to attack under federal and state employment laws.
The Attorney General’s Memorandum dovetails quite neatly with that commentary by setting forth a laundry list of employment practices that constitute unlawful use of protected characteristics. According to the Attorney General, those unlawful employment practices include race-based “diverse slate” policies in hiring, sex-based selection for contracts, and race- or sex-based program participation.
The Attorney General, however, did not stop at hiring practices. The Memorandum then provides “guidance” on what constitutes unlawful diversity, equity, and inclusion training programs, such as those that exclude or penalize individuals based on protected class status or where a program “[c]reates an objectively hostile environment through severe or pervasive use of presentations, videos, and other workplace training materials that single out, demean, or stereotype individuals based on protected characteristics.”
Insights
Have you ever applied for a scholarship, a job, education enrollment, or other opportunity where you were asked to present an example of how you “Overcame Obstacles” due to your upbringing, economic status, or geographic location? That criteria may have well been afoul of this “non-binding federal guidance” if, under scrutiny, the inquiry was really a “proxy” for advantaging those who discussed experiences tied to protected characteristics.
As it concludes, this Attorney General guidance makes clear that all entities should “review all programs, policies, and partnerships to ensure compliance with federal law, and discontinue any practices that discriminate on the basis of protected class.”
