Overview

• The July 29 memorandum identifies four prohibited practices: preferential treatment based on protected traits, use of proxy criteria, segregation by identity and training that promotes discrimination or hostile environments.
• It outlines non-binding best practices for compliance, including open access to programs, documentation of merit-based criteria, elimination of diversity quotas and nondiscrimination clauses in third-party contracts.
• The guidance signals enforcement through the Civil Rights Fraud Initiative, warning that false certifications or failure to comply could trigger funding revocations or FCA actions.
• Any entity receiving federal financial assistance—from universities and hospitals to state agencies and contractors—must review downstream grants and subcontracts to prevent support for unlawful DEI practices.
• Organizations are now auditing and revising DEI policies, trainings and vendor agreements to align with the new DOJ interpretations of Titles VI, VII and IX.