DEI ≠ DOA: It’s All About the Design

by Tyla A. Swinton

Federal contractors who want to continue receiving federal funding, while also maintaining their diversity, equity, inclusion, and accessibility (“DEIA”) policies and programs, can often feel like they are juggling glass balls.  And conservative campaigns that push companies to eradicate DEIA programs entirely, add another level of external pressure.  Adjustments in the design and presentation of existing initiatives can still achieve compliance and avoid potential legal risks, at the same time.

This article examines the Department of Justice’s (“DOJ”) recently released guidance for recipients of federal funding and offers some practical steps for employers who want to modify their established DEIA programs and policies, rather than quash them.  The adjustments discussed in this article are offered to help contractors maintain government financial support and minimize potential legal risks, and are applicable to companies in the private sector as well.

Department of Justice Releases Guidance

Dated July 29, 2025 and released on July 30, 2025, the Department of Justice issued guidance to all federal agencies and recipients of federal funding, specifically, universities, lower-level educational institutions, and government contractors.  “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination” (the “Guidance”) emphasizes the need for recipients to abide by federal anti-discrimination laws and to curtail any practices that discriminate on the basis of a protected class, such as race, color, national origin, sex, and/or religion.  The Guidance also states that recipients who “knowingly fund the unlawful practices of contractors, grantees, and other third parties” may be held liable for discrimination.  [1]

The Guidance outlines practices that the DOJ deems unlawful and provides “best practices” to help prevent violations of federal anti-discrimination laws (and, ultimately, to avoid legal issues stemming from noncompliance).

The DOJ bans five categories of conduct: (1) “preferential treatment based on protected characteristics”; (2) “prohibited use of proxies for protected characteristics”; (3) “segregation based on protected characteristics”; (4) “unlawful use of protected characteristics” in candidate selection and program participation; and (5) “training programs that promote discrimination or hostile environments.”  [2]  Each category is accompanied by examples of actions to avoid, such as requiring programs to attain a specific percentage of participants from underrepresented groups, or focusing recruitment efforts on certain geographic areas based on their racial or ethnic demographics.  [3]

As for “best practices,” the DOJ offers suggestions including, but not limited to, eliminating diversity quotas, establishing anti-retaliation procedures and creating safe reporting mechanisms, and scrutinizing facially neutral criteria for any proxies for race, sex, or other protected characteristics.  [4]  Importantly, these recommendations apply to federal agencies, federal contractors, and other recipients of federal funding, but they are not legally binding.

Practical Steps

Federal funding recipients should consider reviewing and amending their policies, programs, and trainings to ensure compliance with federal anti-discrimination laws.  Though ending efforts to actively foster inclusive workplace environments may seem like the easiest solution, recipients should not be discouraged from maintaining their established policies and procedures.

Adjustments in the design and presentation of existing initiatives can still achieve compliance while also avoiding potential legal risks.  Consider the following practical steps:

  • Audit existing policies and programs to ensure that they are non-discriminatory;
  • Address employee complaints promptly and with attention and sensitivity;
  • Revise mandatory equal employment opportunity trainings to remove any language that the DOJ finds problematic, such as “white privilege” and “toxic masculinity,” and avoid stereotypes;
  • Prevent unlawful segregation by maintaining open membership in all training activities;
  • Prevent unlawful segregation through open and inclusive personnel practices;
  • Ensure all employment decisions are backed by legitimate business reasons and not considerations of protected characteristics.

While federal contractors are under the microscope now, businesses in the private sector should take heed and consider some of the guidance outlined above.  Any entity grappling with this rapidly changing legal landscape should consult a legal professional for additional assistance.

[1] “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination” at 4.

[2] Id. at 4-8.

[3] Id. at 5, 7.

[4] Id. at 8-9.