The Department of Justice (DOJ) has now issued guidance outlining how federal antidiscrimination laws such as Title VI and Title VII of the Civil Rights Act of 1964 apply to federal contractors that receive federal funding.
The guidance implements Executive Order 14173 (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”) that we addressed an earlier article. In particular, the guidance explains the DOJ’s application of federal antidiscrimination laws to various Diversity, Equity, and Inclusion (DEI) practices the DOJ now considers to be largely “unlawful” or “legally risky.”
The viewpoint behind the new guidance can be summed up with the policy statement that introduces the guidance: “discrimination based on protected characteristics [is not only] illegal under federal law, but it is also dangerous, demeaning, and immoral.” In short, the DOJ views many DEI practices as both illegal and immoral and the regulators will no longer turn a “blind eye” to their continued application where federal funds are utilized. This places a heavy burden on federal contractors to justify the continued application of many DEI-based initiatives in the workplace, especially in light of potentially contrary policies at the state and local government level.
While the newly issued guidance does not have the same force as a statute, it sets the tone for the types of conduct and policies that will be subject to close scrutiny and enforcement actions by DOJ if the guidance is not followed. As before, existing policies and practices should be evaluated in light of these new regulations. Ultimately, the courts will be called upon to determine on whether the administrative guidance is consistent with the civil rights statutes and applicable case law.
Key DOJ Guidance for Federal Contractors
For contractors engaging in federal work, the guidelines identify various categories of DEI-related practices that the current DOJ views as “unlawful” and “immoral” or as presenting “significant legal risks” for federal funds, absent very narrow exceptions under federal law. The following guidelines have particular relevance to federal contractors:
Preferences Based on Protected Characteristics
The DOJ guidance makes it loud and clear that entities receiving federal funds should not condition receipt of opportunities, benefits, or advantages on protected characteristics—such as race, sex, ethnicity, national origin, religion—in a way that disadvantages other qualified individuals. The focus is “equality” not “equity.” Equal treatment prohibits any set asides or preferences that are linked to someone’s protected category. The guideline list some examples to watch for:
- Programs designed to address specific racial groups that may be viewed as disadvantaged in the past
- Hiring or promotion consideration for underrepresented affinity groups defined by race or sex
- “Safe spaces” that provide special resources based on race or ethnicity
Thus, any set asides or other benefits based on minority or gender status, even if intended to correct perceived historical imbalances in the workforce, will be viewed as an invidious form of unlawful discrimination. In common parlance, no more woke culture in the workplace for federal projects.
Proxies for Protected Characteristics
The DOJ states that facially neutral criteria—including terms such as “lived experience,” “cultural competence,” “overcoming obstacles,” or geographic/institutional targeting—may still be unlawful if the intent is to circumvent the requirement of equal treatment and to confer an advantage based on protected characteristics. If these terms essentially function as substitutes for explicit race- or sex-based criteria, they constitute illegal discrimination. Examples could include:
- Requesting “diversity statements” or “overcoming obstacles” essays in applications that advantage candidates based on protected traits;
- Focusing recruitment efforts on geographic areas or institutions chosen primarily for their racial or ethnic composition.
This guidance is designed to fire a warning shot at those federal contractors that use generic terms to continue existing programs that are considered illegal forms of discrimination. Thus, the regulators will be looking at an employer’s intent as well as their written policies, even if neutral on their face.
Training Programs
Programs that stereotype, exclude, or disadvantage individuals based on protected characteristics, or that require affirmation of ideological positions, may create a hostile environment and violate federal law. For example, mandatory training that focuses on notions of “white privilege” or “toxic masculinity” or that penalizes participants for dissent from such concepts, could be found to create an unlawful hostile environment.
Best Practices
The DOJ guidance does come with some recommended “best practices” that, while not mandatory, are highly relevant for steering clear of agency enforcement actions. These might be considered safe harbors for federal contractors that steer their practices in line with the DOJ policies. These practices are likely to help guide when enforcement is to occur:
- Require open access to all programs, resources, and activities, regardless of protected characteristics.
- Condition any selection criteria on specific, measurable skills, and qualifications directly related to job or program performance.
- Watch out for any use of demographic criteria—even if neutral on its face— to achieve outcomes tied to protected characteristics.
- Document policies to show clear, legitimate rationales for any criteria that may correlate with protected traits.
- Analyze all neutral criteria for potential proxy effects before implementation.
- Prohibit diversity quotas and demographic benchmarks for any position. Instead, rely on nondiscriminatory performance metrics.
- Avoid programs or training that result in exclusionary or segregated groups.
- Include nondiscrimination languages and clauses in contracts and monitor compliance.
- Establish antiretaliation procedures and policies to ensure safe, confidential reporting of violations by employers.
Key Takeaways on the DOJ’s DEI Enforcement Priorities
First, any program, benefit, etc., that is explicitly based on a protected characteristic should be strongly considered for revision or elimination.
Second, employers should also review policies and practices based on potential “proxy” criteria—policies or practices that may be facially neutral but are designed to achieve demographic outcomes based on protected characteristics. For any criteria that DOJ could view as “proxy” criteria, federal contractors will need to document the legitimate, non-discriminatory rationales for that criteria and be prepared to explain why such criteria are not a stand-ins for protected characteristics.
Such review / revision of policies and practices should occur before the federal contractor certifies that it is in compliance with anti-discrimination laws. The agency’s Civil Rights Fraud Initiative means The False Claims Act (FCA) will be used as a primary enforcement tool. Knowingly making false certifications of compliance with anti-discrimination laws can constitute an actionable offense for any pay application and will likely trigger FCA investigations and liability.
The new guideline signals increased attention on DEI policies and practices for all contractors receiving federal funds. Miller Nash attorneys are available to advise on the DOJ’s new guidance and assist contractors in ensuring compliance.
This article is provided for informational purposes only—it does not constitute legal advice and does not create an attorney-client relationship between the firm and the reader. Readers should consult legal counsel before taking action relating to the subject matter of this article.
