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08/12/2025

Fisher Phillips issues two new updates

DEI Guidance

Source: Fisher Phillips, August 4, 2025

Federal officials just issued another warning that employers may be at risk of losing federal funding – including grant funding – if their DEI or similar programs violate anti-discrimination laws. Recent guidance from the Department of Justice (DOJ) signals that now is a good time to ensure your programs align with legal standards. The July 29 guidance reminds all federal agencies and recipients of federal funding that programs should not discriminate based on race, color, national origin, sex, religion, or other protected characteristics “no matter the program’s labels, objectives, or intentions.” The DOJ also suggested best practices for creating compliant programs. While these practices are not required, all organizations and HR departments can use the guidance as a roadmap. This is the latest in a string of directives from the Trump administration clarifying how the administration interprets existing federal civil rights laws to apply to diversity, equity, and inclusion programs. Here’s what you need to know.

6 Key Points for Employers

The purpose of the guidance, according to the DOJ, is to ensure “taxpayer money is used lawfully and for the public good” and the government is “serving the American people and not ideological agendas.” The memo identifies six key categories of discriminatory policies and practices that may run afoul of federal civil rights laws – including Title VII of the Civil Rights Act – and put funding in jeopardy:

1. Preferential Treatment

According to the guidance, organizations that receive federal funding may not provide opportunities, benefits, or advantages to individuals or groups based on protected traits – including race and sex – in a way that disadvantages other qualified people (except in very limited situations). Examples provided include race-based internships and preferential hiring or promotion decisions.

2. Creating New Criteria that are Merely Proxies 

You should not use “ostensibly neutral criteria” that are simply substitutes for unlawful considerations based on race, ethnicity, sex, or other protected characteristics. Examples include asking about “cultural competence,” “lived experience,” or “cross-cultural skills” with the intention of making selection decisions based on race or ethnicity. The guidance also cautions against using hiring criteria that target specific geographic locations or institutions to find candidates based on race or ethnicity rather than “other legitimate factors.”

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Michigan Standard Employment Forms May No Longer Hold Up in Court

Source: Fisher Phillips, August 5, 2025

The Michigan Supreme Court just ruled that many boilerplate forms employees sign on day one – sometimes known as adhesive employment agreements – are no longer automatically enforceable if they shorten the timeframe for filing legal claims. The July 31 decision in Rayford v. American House Roseville I, LLC, held that such agreements will now be scrutinized under a “reasonableness” test. How did we get here, and what should Michigan employers do now? Below, we’ll walk you through the backstory, break down the Court’s holding, and offer two key action items to help your organization.

How Did We Get Here?

Until now, Michigan courts largely enforced employment handbooks, applications, and standalone agreements containing a 180-day deadline to file legal claims (which cut sort the standard three-year statute of limitations). That approach stemmed from two appellate rulings in 2005 that held these terms were fine so long as they were clear and no other contract defense applied.

• The Rayford case involved a certified nursing assistant who signed a standard “Employee Handbook Acknowledgment” with a 180-day claim deadline.
• She later filed a discrimination and retaliation lawsuit under Michigan’s Elliott-Larsen Civil Rights Act, but did so outside that shortened window.
• The lower court ruled that the acknowledgment clearly required the CNA to file her claim within six months, but she failed to do so and thus her claim was dismissed.
• The CNA appealed that decision all the way to the Michigan Supreme Court.

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