On April 23, 2025, President Donald Trump issued an Executive Order (Order) titled, “Restoring Equality of Opportunity and Meritocracy,” which prohibits federal agencies, including the Equal Employment Opportunity Commission (the EEOC), from using the disparate impact theory to assess discrimination claims.
Background on the Disparate Impact Theory
More than 50 years ago, the U.S. Supreme Court first recognized the disparate impact theory in a 1971 decision. Specifically, in Griggs v. Duke Power Co., 401 U.S. 424 (1971), the Supreme Court concluded that a facially neutral policy could violate Title VII of the Civil Rights Act of 1964 (Title VII), if such policy adversely affected a protected group. The Supreme Court concluded that the company’s requirement that employees have a high school diploma and pass aptitude tests as a condition of employment disproportionately impacted African American employees insofar as such employees experienced challenges meeting the company’s requirement and were rarely hired or promoted.
Congress later codified the disparate impact theory and set forth the burden of proof in disparate impact cases in the 1991 amendments to the Civil Rights Act. Per those amendments, an employee bringing a claim under disparate impact theory must show that a particular employment policy or practice has a disparate impact on a protected group. An employee may attempt to meet this burden using statistical evidence. If successful, the burden shifts to the employer to show the practice is job-related and consistent with business necessity. Even if the employer meets this burden, the employee may still prevail if he or she can show there is a less discriminatory and equally effective alternative policy or practice the employer declined to adopt.
As we reminded you in our post on New EEOC Guidance on DEI Practices, Title VII prohibits workplace discrimination on the basis of employees’ race, color, national origin, sex and/or religion. Title VII is similar to many states’ own workplace anti-discrimination laws, including the New York State (or New York City) Human Rights Law, the Massachusetts Law Against Discrimination and the Connecticut Fair Employment Practices Act. State laws often prohibit discrimination on wider bases of several more protected characteristics, such as marital status, sexual orientation, ethnic traits closely associated with race (such as hair) and more.
What does the Executive Order Say?
The President’s Order describes disparate impact liability as establishing a presumption of unlawful discrimination where there are differences in outcomes among different races, sexes or similar groups, even when there is no facially discriminatory policy or practice. The Order indicates such liability runs afoul of the bedrock principle of the United States, which guarantees equality of opportunity, not equal outcomes. The Order concludes that disparate impact liability transforms America’s promise of equal opportunity and is unlawful.
To this end, the Order prohibits all federal agencies, including the EEOC, from using the disparate impact theory to assess liability under Title VII. To implement this prohibition, the EO effectively repeals the provisions of Title VI of the Civil Rights Act of 1964 (i.e., the federal regulation prohibiting discrimination based on race, color or national origin in programs and activities receiving federal funding) which contemplate disparate impact liability. Additionally, the Order establishes a timeline for federal agencies to report on actions taken to discontinue enforcement of statutes and regulations pertaining to disparate impact liability.
The Order explicitly directs the EEOC to take “appropriate action” with respect to all pending investigations, civil suits or positions regarding ongoing matters that rely on the theory of disparate impact liability. While it is unclear which pending EEOC complaints and lawsuits will be affected by the directive, it is likely pending investigations will feel immediate effects. Unfortunately, it is difficult to ascertain how many investigations may be discontinued due to federal laws prohibiting disclosure of information concerning pending investigations.
How does this affect private employers?
While the Order restricts workplace discrimination theories available to the EEOC, employees still have rights to bring their own disparate impact claims under Title VII. Due to the nature of the theory requiring proof of the policy or requirement having systemic impacts, employees typically bring disparate impact claims on behalf of entire groups of employees (i.e., class actions) rather than individuals. Unlike the EEOC, private litigants face class certification requirements, which may deter individuals from filing, particularly if there are few other employees having had similar experiences with the employer. Nevertheless, a private right of action remains available.
It is important to remain vigilant when ensuring that employer practices, policies and procedures are consistent with federal and state laws prohibiting discrimination, including retaliation and harassment.
