The Office of the Attorney General in the US Department of Justice (DOJ) issued a Memorandum on July 29, 2025, titled “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination” (the Guidance). The Guidance lays out the US administration’s views on federal civil rights laws and provides examples of programs that the administration asserts violate those laws; it also outlines the administration’s intention to prosecute such violations via the False Claims Act (FCA).
The Guidance is the latest in a series of directives this year defining activity that might violate federal antidiscrimination laws—starting with an executive order issued on January 21, followed by a February 5 memo from the Attorney General, two technical assistance documents released on March 19 by the DOJ and Equal Employment Opportunity Commission (EEOC), and subsequent updated guidance through the establishment of the DOJ Civil Rights Fraud Initiative on May 19.
Morgan Lewis has provided extensive analysis on this topic as the guidance has evolved. [1]
The new Guidance states that it is intended to clarify the application of existing federal anti-discrimination laws, particularly as they pertain to programs that are characterized as diversity, equity, and inclusion (DEI) initiatives. Significantly, the Guidance focuses on the requirement that entities receiving federal funding must ensure that their programs do not discriminate on the basis of race, color, national origin, sex, religion, or other protected characteristics—“no matter the program’s labels, objectives, or intentions.” In other words, the Guidance targets activities that are labeled as DEI or with “other euphemistic terms” but that, in practice, are deemed by the administration to discriminate based on a protected characteristic.
The Guidance identifies the key federal antidiscrimination laws, such as Title VI and Title VII of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, and the Equal Protection Clause of the Fourteenth Amendment. The Guidance then lists, under the heading Unlawful Discriminatory Policies and Practices, examples of “Unlawful Practices,” “Unlawful Proxies,” “Unlawful Segregation,” and “Unlawful Training Requirements.”
The Guidance also provides “Recommendations on Best Practices,” including that an employer’s training programs are open to all persons; selection decisions are based on measurable skills and qualifications; facially neutral criteria are not used as a proxy for discrimination; diversity quotas are eliminated; and exclusionary training programs do not occur.
The Guidance expresses implicit support for individuals who report or oppose unlawful discrimination at federally funded entities by setting forth anti-retaliation protections they should receive. Per the Guidance, individuals who “rais[e] concerns, fil[e] complaints, or refus[e] to participate in potentially discriminatory programs” must be protected from retaliation by established and communicated policies, and there should be confidential channels for those individuals to make such reports on unlawful practices.
The document thus serves as a direct call for employees, participants, and beneficiaries to act as internal monitors and report concerns without fear of reprisal. The emphasis on providing “confidential, accessible channels” is a significant facilitator, as it directly addresses a primary barrier to reporting—i.e., fear of exposure or retaliation.
A more detailed analysis of the specifics of the Guidance can be found in Morgan Lewis’s previous LawFlash on the substance of the Attorney General’s memorandum.
The focus on internal whistleblower protections and reporting mechanisms within the Guidance suggests a strategic intent to decentralize and internalize compliance monitoring within federally funded entities. By encouraging individuals within these organizations to report, the Office of the Attorney General appears to be seeking to empower frontline compliance agents. This approach suggests, in turn, that the Office of the Attorney General views internal whistleblowers as a primary, cost-effective instrument for the early detection and correction of discriminatory practices.
This fosters a self-policing dynamic, where entities are incentivized to address issues internally to avoid external scrutiny and possible enforcement actions. Such a system also generates internal documentation that could prove valuable in future investigations, whether initiated by the government or through private qui tam actions. Although the Guidance stresses internal reporting, the very existence of the whistleblower provisions is tacit acknowledgement of the potential for external reporting if internal channels fail or are ignored. This creates a dual pressure point for federally funded entities: they must effectively address internal reports or risk external exposure and more severe consequences.
The anti-retaliation provisions protect individuals who oppose allegedly discriminatory practices. If an entity retaliates, fails to act on legitimate internal reports, or the whistleblower disagrees with the entity’s conclusions that the allegations lack merit, the whistleblower may then seek external avenues.
By clarifying its interpretation of what constitutes unlawful discrimination, providing specific examples of unlawful programs and practices, and reiterating the protections against retaliation, the Guidance incentivizes individuals to report potential violations that could later become the subject of an external claim if internal remedies prove insufficient.
The broader legal landscape—not expressly referred to in the Guidance—includes mechanisms such as the FCA, which offers its own whistleblower protections and financial incentives. We anticipate that actions and investigations pursuant to the FCA will be a significant tool for the government and private relators to pursue federally funded entities that engage in the sorts of practices that, per the Guidance, are proscribed by federal law.
Indeed, under Executive Order 14173, government contractors must now “certify that [they] [do] not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.” As we described in a previous LawFlash on the establishment of the Civil Rights Fraud Initiative, this provision is “intended to aid future enforcement efforts by simplifying the government’s burden to demonstrate the FCA’s materiality element.”
By describing in detail the type of DEI activities the government deems could violate the anti-discrimination laws, the Guidance provides a blueprint for how DOJ will investigate and pursue allegations of FCA violations premised on such conduct.
In light of these developments, recipients of federal funds should be prepared to reduce their risk.
There are several defenses that individuals and entities subject to DOJ enforcement actions for violating the FCA in this context may raise; however, DOJ investigations and subsequent litigation, even in their early stages, are burdensome and expensive to defend. As we previously explained, to best position themselves in preparation for any potential investigation or litigation, federal contractors and other federal funding recipients should take immediate, strong actions to guard against FCA liability risk. In addition to the steps we previously outlined, organizations should review their directives and procedures regarding internal reporting, whistleblower protections, and anti-retaliation. In conducting such a review, the organization should pay particular attention to the Guidance’s demand for “clear” anti-retaliation procedures and mechanisms for safe reporting.
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[1] See Morgan Lewis LawFlashes Executive Orders Target DEI Programs and Gender Protections; Executive Order Ends Federal Contractor ‘Affirmative Action,’ Tasks Agencies to Focus on Private-Sector DEI Efforts; DOJ Announces Establishment of Civil Rights Fraud Initiative; Strategy Considerations for Companies Assessing Risks of Fraud Liability for DEI Programs; EEOC and DOJ Issue Guidance on Discrimination Related to DEI under Title VII, and DOJ Issues Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination.