Attorney General Bondi Issues Guidance to Recipients of Federal Funding “Regarding Unlawful Discrimination”

This alert summarizes the Guidance and compares it to prior executive statements—including a Q&A issued by the Biden administration in August 2023, discussing the Supreme Court’s decision in Students for Fair Admissions v. Harvard (SFFA) (“2023 Q&A”), President Trump’s Executive Orders on DEI (EOs), the Department of Education’s February 14, 2025 Dear Colleague Letter (DCL) and February 28, 2025 Frequently Asked Questions (FAQs), and the Equal Employment Opportunity Commission (EEOC)’s March 19, 2025 guidance (“EEOC Guidance”)—to analyze the extent to which the Guidance represents a substantive change in how the Administration interprets federal antidiscrimination laws or simply a change in emphasis and likely enforcement efforts.

Summary of Guidance
The Guidance defines a “non-exhaustive list” of four “unlawful practices” and provides specific examples of each: (a) preferential treatment; (b) proxies; (c) segregation based on protected characteristics; and (d) DEI training programs.

1. Granting Preferential Treatment Based on Protected Characteristics
   The Guidance states that “preferential treatment occurs when a federally funded entity provides opportunities, benefits, or advantages to individuals or groups based on protected characteristics in a way that disadvantages other qualified persons, including such practices portrayed as ‘preferential’ to certain groups. Such practices violate federal law unless they meet very narrow exceptions.” As examples of unlawful practices, the Guidance cites (i) scholarships or programs that are limited to members of a certain demographic group, (ii) prioritizing candidates from “underrepresented groups” for admission, hiring, or promotion “where the preferred ‘underrepresented groups’ are determined on the basis of a protected characteristic” such as race or sex, and (iii) limiting access to facilities, such as a student lounge, to certain racial or ethnic groups.

   This section of the Guidance is largely consistent with prior interpretations of antidiscrimination law, going back to at least the 2023 Q&A, which states that “[a] decision to restrict membership or participation in activities and spaces based on race … would raise significant concerns.”

2. Prohibited Use of Proxies for Protected Characteristics
   According to the Guidance, “[u]nlawful proxies occur when a federally funded entity intentionally uses ostensibly neutral criteria that function as substitutes for explicit consideration of race, sex, or other protected characteristics.” Facially neutral criteria can be problematic when (i) “[t]hey are selected because they correlate with, replicate, or are used as substitutes for protected characteristics” or (ii) “[t]hey are implemented with the intent to advantage or disadvantage individuals based on protected characteristics.” Examples of “potentially unlawful proxies” cited in the Guidance include “‘Cultural Competence’ Requirements,” “Geographic or Institutional Targeting” and “‘Overcoming Obstacles’ Narratives or ‘Diversity Statements.’”

   This section of the Guidance arguably goes further than prior interpretations of federal antidiscrimination laws in prohibiting the use of race-neutral criteria. In Boston Parent Coalition for Academic Excellence Corporation v. School Committee for City of Boston, 89 F.4th 46 (1st Cir. 2023), cert. denied, 145 S. Ct. 15, 220 L. Ed. 2d 262 (2024) (“Boston Parent”), the First Circuit rejected the plaintiff’s argument that Boston violated antidiscrimination laws by changing the admissions criteria for certain selective schools, notwithstanding the race-neutral character of the new criteria, because the changes had been implemented with the intent to reduce racial disparities. The court rejected this “intent only” theory of discrimination in part because it “runs counter to what appears to be the view of a majority of the members of the Supreme Court as expressed in [SFFA].” Citing the concurrences in SFFA by Justices Gorsuch, Thomas, and Kavanaugh (with no objection by the three dissenting Justices), the First Circuit noted that six Justices appeared to agree “that universities can lawfully employ valid facially neutral selection criteria that tend towards” the goal of achieving a racially diverse student body.

   This reasoning in Boston Parent, however, was called into question by Justice Alito’s dissent from the Supreme Court’s denial of certiorari, which argued that direct evidence that Committee members had “worked to decrease the number of white and Asian students at the exam schools in service of ‘racial equity’” was “racial balancing by another name and is undoubtedly unconstitutional.” Notably, Justice Alito’s dissent was joined by Justice Thomas (one of the two Justices whose concurrence in SFFA was cited by the First Circuit). In addition, Justice Gorsuch, while concurring in the denial of certiorari, wrote that he shared Justice Alito’s concerns about the First Circuit’s analysis.

   The Guidance appears to adopt the position taken by Justice Alito’s dissent from the denial of certiorari in Boston Parent, rather than the First Circuit’s holding. See also Coal. for TJ v. Fairfax Cnty. Sch. Bd., 218 L. Ed. 2d 71 (Feb. 20, 2024) (Alito, J., dissenting from denial of certiorari). Indeed, several of the “best practices” listed in the Guidance focus on avoiding the use of race-neutral measures such as socio-economic status, first-generation status, or geographic diversity, as a means of increasing the participation of specific racial or sex-based groups.

   Without a statutory basis to challenge neutral practices undertaken without the intent to discriminate, there generally is not a basis for disparate impact liability. Title VII permits disparate impact claims, for example, but outside of employment discrimination laws, the Fair Housing Act, and Title VI, most antidiscrimination statutes require proof of discriminatory animus.

   In addition, President Trump’s April 28, 2025, Executive Order titled Restoring Equality of Opportunity and Meritocracy provides that “it is the policy of the United States to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible to avoid violating the Constitution, Federal civil rights laws, and basic American ideals.”

   That Executive Order instructs the Attorney General to “initiate appropriate action to repeal or amend the implementing regulations for Title VI of the Civil Rights Act of 1964 for all agencies to the extent they contemplate disparate-impact liability.” Thus, the Guidance’s assertions that “facially neutral” practices can be unlawful discrimination would be at odds with this elimination of disparate impact theory unless it is established that a challenged practice is undertaken for the purpose of discriminating on the basis of race or other protected characteristics.

3. Segregation Based on Protected Characteristics
   The Guidance describes unlawful segregation as organizing “programs, activities, or resources—such as training sessions—in a way that separates or restricts access based on … protected characteristics.” Examples include (i) trainings that require participants to separate into race-based groups, (ii) designating a student lounge as a “safe space” for certain groups that either prohibits or discourages access by students of other races, and (iii) hosting DEI workshops that requires participants to identify with a specific racial or ethnic group.

   This section of the Guidance is consistent with prior interpretations of racial discrimination. As noted above, the 2023 Q&A states that a “decision to restrict membership or participation in activities and spaces based on race, however, would raise significant concerns and trigger strict scrutiny under Title VI.” The 2023 Q&A also states that “in some circumstances, such as an activity promoting hateful or demeaning racial stereotypes or violence towards people of a particular race, extracurricular activities that have a race-related theme have the potential to create a hostile environment.”

   In contrast to the Biden administration’s positions on gender, however, the Guidance also states that “[w]hile compelled segregation is generally impermissible, failing to maintain sex-separated athletic competitions and intimate spaces can also violate federal law.” According to the Guidance, allowing “males, including those self-identifying as ‘women,’ to access single-sex spaces designed for females—such as bathrooms, showers, locker rooms, or dormitories” risks creating a hostile environment under Title VII. “Likewise, permitting males to compete in women’s athletic events almost invariably denies women equal opportunity by eroding competitive fairness.”

   The Guidance also arguably extends prior interpretations of antidiscrimination law by defining “unlawful use of protected characteristics” to include “policies that explicitly mandate representation of specific groups in candidate pools or implicitly prioritize protected characteristics through selection criteria, such as ‘diverse slate’ requirements, diversity decision-making panels, or diversity-focused evaluations.” For example, the Guidance states it would be unlawful for a federally funded research institute to adopt a policy “requiring that all interview slates for faculty positions include a minimum number of candidates from specific racial groups (e.g., at least two ‘underrepresented minority’) … This extends to any policy that sets racial benchmarks or mandates demographic representation in candidate pools, such as requiring a certain percentage of finalists to be from ‘diverse’ backgrounds.” Although neither practice had previously been endorsed by the Department of Justice or courts, both were fairly common, with the latter often referred to as the “Rooney Rule” after Dan Rooney, the former owner of Pittsburgh Steelers, advocated for its adoption in the hiring of coaches in the National Football League.

   Similarly, the Guidance identifies as unlawful the fairly common practice by state and local agencies of implementing policies that prioritize “awarding contracts to women-owned businesses” or “automatically advancing female vendors or minority-owned businesses [MWBEs] over equally or more qualified businesses without preferred group status.” The Guidance does allow, however, that such programs may be lawful if they “satisfy[] the appropriate level of judicial scrutiny.”

4. Training Programs That Promote Discrimination or Hostile Environments
   Finally, the Guidance defines “unlawful DEI training programs” to be programs that (i) stereotype, exclude, or disadvantage individuals based on a protected characteristic or (ii) create “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.” Examples include trainings that state “all white people are inherently privileged” or refer to “toxic masculinity.” The Guidance notes, however, that “Federal law allows workplace trainings that are focused on preventing unlawful workplace discrimination and that do not single out particular groups as inherently racist or sexist.”

   This section of the Guidance is consistent with prior interpretations of antidiscrimination law, as well as court decisions issued prior to President Trump’s current term applying Title VII to discrimination claims arising from workplace DEI trainings. The EEOC Guidance, for example, states “Depending on the facts, an employee may be able to plausibly allege or prove that a diversity or other DEI-related training created a hostile work environment by pleading or showing that the training was discriminatory in content, application, or context. In cases alleging that diversity trainings created hostile work environments, courts have ruled in favor of plaintiffs who present evidence of how the training was discriminatory (for example, in the training’s design, content, or execution) ….”

5. The Guidance’s Recommendations on Best Practices
   In addition to identifying “unlawful practices,” the Guidance also includes several “non-binding” recommendations “to help entities avoid the risk of violations.” The recommendations are:

-  Ensure Inclusive Access. “All workplace programs, activities, and resources should be open to all qualified individuals, regardless of race, sex, or other protected characteristics.”

-  Focus on Skills and Qualifications. “[S]ocioeconomic status, first-generation status, or geographic diversity must not be used if selected to prioritize individuals based on racial, sex-based, or other protected characteristics.”

-  Prohibit Demographic-Driven Criteria. “Intent to influence demographic representation risks violating federal law. For example, a scholarship program must not target ‘underserved geographic areas’ or ‘first-generation students’ if the criteria are chosen to increase participation by specific racial or sex-based groups.”

-  Document Legitimate Rationales. If using criteria in hiring, promotions, or selecting contracts that might correlate with protected characteristics, document clear, legitimate rationales unrelated to race, sex, or other protected characteristics.

-  Scrutinize Neutral Criteria for Proxy Effects. “Before implementing facially neutral criteria, rigorously evaluate and document whether they are proxies for [protected characteristics]. For instance, a program targeting ‘low-income students’ must be applied uniformly without targeting areas or populations to achieve racial or sex-based outcomes.”

-  Eliminate Diversity Quotas. For example, “replace a policy requiring ‘at least one minority candidate per slate’ with a process that evaluates all applicants based on merit.”

-  Avoid Exclusionary Training Programs. Make trainings “open to all” and do not require participants to affirm specific ideological positions or “confess” to personal biases or privileges based on a protected characteristic.

-  Include Nondiscrimination Clauses in Contracts to Third Parties and Monitor Compliance. Incorporate explicit nondiscrimination clauses in grant agreements, contracts, or partnership agreements, requiring third parties to comply with federal law, and monitor third parties for compliance.

-  Establish Clear Anti-Retaliation Procedures and Create Safe Reporting Mechanisms. Implement and communicate policies that prohibit retaliation against individuals who engage in protected activities, such as raising concerns, filing complaints, or refusing to participate in potentially discriminatory programs.

Conclusion
While the Guidance reiterates some longstanding interpretations of antidiscrimination law—such as prohibitions against explicit segregation or overtly preferential treatment—it also introduces a more aggressive stance toward facially neutral practices that may be seen as proxies for race- or sex-based considerations. It also forcefully recalibrates how federal agencies are likely to investigate and enforce antidiscrimination laws, raising the compliance bar for every recipient of federal dollars. This is particularly relevant in light of the May 2025 launch of the Justice Department’s Civil Rights Fraud Initiative, which, as described in Pillsbury’s May 21, 2025, Client Alert, utilizes the False Claims Act to investigate and pursue claims against recipients of federal funds that “knowingly” violate federal civil rights laws. In addition to agency action, the Guidance may also empower private actors to challenge practices that are alleged to be intended as proxies for unlawful discrimination.

Institutions receiving federal funding—including government contractors, health care providers, and educational institutions—should therefore assess their current policies and practices with regard to selection criteria, hiring and training, against the detailed Guidance and prepare for increased scrutiny. Although legal challenges are anticipated, the Supreme Court’s recent limitations on nationwide injunctions suggest a fragmented landscape of compliance obligations may emerge across jurisdictions. As with prior shifts in regulatory interpretation, proactive compliance reviews and legal consultation will be essential in navigating this evolving environment.