On April 23, 2025, President Trump issued his executive order, Restoring Equality of Opportunity and Meritocracy (“EO”). The EO’s stated purpose is “to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible to avoid violating the Constitution, federal civil rights laws, and basic American ideals.”
Disparate Impact Liability Defined
Generally, disparate impact liability refers to a theory of liability under the civil rights and antidiscrimination laws where violations may be proven by showing that an employment practice or policy has a disproportionately adverse effect on members of a protected class, as compared to non-members of the class. According to the EO, disparate impact liability “holds that a near insurmountable presumption of unlawful discrimination exists where there are any differences in outcomes in certain circumstances among different races, sexes, or similar groups, even if there is no facially discriminatory policy or practice or discriminatory intent involved, and even if everyone has an equal opportunity to succeed.” While the Civil Rights Act of 1964 does not expressly prohibit policies creating a disparate impact, in 1971, the Supreme Court interpreted it to prohibit facially-neutral practices that are “discriminatory in operation.”[1] A disparate impact claim “challenges practices that have a ‘disproportionately adverse effect on minorities’ and are otherwise unjustified by a legitimate rationale.”[2] For years, the Civil Rights Division of the Department of Justice and other federal agencies have promulgated disparate impact regulations, detailed compliance manuals, and other public, written policies regarding the disparate impact standard and its application, including agency legal manuals[3] that set forth standards for proving discrimination under the civil rights laws using disparate impact theories.
It is important to note that this EO primarily addresses Title VI and Title VIII of the Civil Rights Act given that they are directly related to federal funding. Title VI prohibits discrimination in programs and activities receiving federal funding and Title VIII, also known as the Fair Housing Act, prohibits discrimination in housing.
Disparate Impact Application
According to the EO, disparate impact liability “hinder[s] businesses from making hiring or other employment based on merit and skill, their needs, or the needs of their customers because of the specter that such a process might lead to separate outcomes, and thus disparate-impact lawsuits.”
Furthermore, the EO claims that “[d]isparate-impact liability is wholly inconsistent with the Constitution and threatens the commitment to merit and equality of opportunity that forms the foundation of the American dream.”
However, current Supreme Court precedent provides that “good intent or absence of discriminatory intent does not redeem employment procedures or testing mechanisms that operate as ‘built-in headwinds’ for minority groups and are unrelated to measuring job capability.” See Griggs v. Duke Power Co., 401 U.S. 424, 432 (1971). “The touchstone is business necessity. If an employment practice which operates to exclude [protected individuals] cannot be shown to be related to job performance, the practice is prohibited.” See id. at 431.
What Does the EO Require?
The EO revokes certain presidential approvals of regulations previously issued by executive agencies prohibiting disparate impact discrimination under Title VI of the Civil Rights Act of 1964 (which prohibits racial discrimination in federally funded programs). It also directs the EEOC, the AG, and other federal agencies to take the following actions:
- Executive agencies must deprioritize their enforcement of anti-discrimination actions premised on disparate impact liability;
- The U.S. Attorney General (“AG”) is instructed to initiate the repeal or amendment of regulations for Title VI to the extent they relate to disparate impact liability;
- Within 30 days, the AG must provide a report on (1) existing regulations, guidance, rules, or orders that enforce disparate impact liability, as well as an outline of agency steps to amend or repeal these; and (2) laws and decisions implicating disparate impact liability, including at the state level; within 45 days the AG, the Chair of the Equal Employment Opportunity Commission (“EEOC”), the Secretary of Housing and Urban Development, Director of the Consumer Financial Protection Bureau, the chair of the Federal Trade Commission, and the heads of other agencies that enforce the Equal Credit Opportunity Act, Title VIII of the Civil Rights Act (the Fair Housing Act), Titles VI and VII of the Civil Rights Act, or any other anti-discrimination laws must assess pending matters and the positions taken in them that rely on a theory of disparate impact liability and to “take appropriate action with respect to such matters consistent with the policy of this order;”
- All agencies must evaluate and take action on their existing consent judgments and permanent injunctions relying on disparate impact liability; and
- The AG is to coordinate with other agencies to determine their ability to preempt state laws, regulations, policies, and practices that impose disparate impact liability or otherwise have “constitutional infirmities that warrant Federal action, and shall take appropriate measures consistent with the policy of this order.”
What Does This Mean for Employers?
This EO will initially impact federal agencies, including actions that they have taken against employers. Accordingly, employers that are facing actions by these agencies premised upon a disparate impact theory may be able to use this EO to limit or stop the agency from continuing their enforcement efforts against them. Additionally, if an employer is presently subject to an injunction or consent decree with a federal agency intended to address disparate impact, it may be able to reference the EO in an effort to change or limit those obligations.
The impact of this EO on actions by private litigants is uncertain. Without action by Congress or the Supreme Court, it is unlikely that disparate impact liability will become obsolete, particularly in light of its status as a long-standing theory of liability frequently recognized by the Court—which has also recently affirmed disparate impact claims. Given this, as well as its extensive role in state and local law, employers should continue to evaluate their practices for adverse impacts on protected groups.
As we have advised throughout the past months, employers should first and foremost ensure that their current practices, policies, hiring processes, and requirements comply with their obligations under local, state, and federal anti-discrimination law. In evaluating these practices, employers should continue to eliminate artificial barriers not reasonably related to a business purpose and avoid making decisions on the basis of an individual’s protected characteristic.
Employers should stay apprised of legal and regulatory developments as federal agencies respond to the EO. We anticipate that this area may shift quickly due to court challenges and evolving policy interpretations.
[1] See Griggs v. Duke Power Co., 401 U.S. 424 (1971).
[2] Texas Dep’t of Hous. & Cmty. Affs. v. Inclusive Communities Project, Inc., 576 U.S. 519 (2015) (quoting Ricci v. DeStefano, 557 U.S. 557, 578 (2009)).
[3] See, e.g., Department of Justice Civil Rights Division Title VI Manual, Section VII, “Proving Discrimination – Disparate Impact,” available at: https://www.justice.gov/crt/fcs/T6Manual7 (last accessed May 2, 2025).
