Trump Administration Moves to Eliminate Federal Government’s Use of Disparate Impact Theory Liability

On April 23, 2025, President Trump signed an executive order instructing that federal agencies cease using the disparate impact theory of liability under federal civil rights laws, including Title VII of the Civil Rights Act of 1964 (addressing employment discrimination) and Title VI (addressing discrimination in education). 

The order states specifically, “It is the policy of the United States 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,” and directs that all federal agencies shall “deprioritize” enforcement of statutes and regulations relying on disparate impact theory. The order further directs the attorney general to take appropriate action to repeal or amend Title VI regulations to the extent they contemplate disparate impact liability and instructs the chair of the Equal Employment Opportunity Commission (EEOC), within 45 days, to review all pending investigations and civil lawsuits that rely on a theory of disparate impact liability and “take appropriate action” consistent with the policy of the executive order. 

As a practical matter for employers, this means that at least through the remainder of the Trump administration, the EEOC is unlikely to investigate charges of discrimination premised on disparate impact liability under Title VII, and unlikely to file new cases in federal court relying on a theory of disparate impact liability. This is likely true as to educational institutions subject to Title VI as well. Whether the EEOC will move to dismiss or otherwise withdraw pending lawsuits in which it alleges disparate impact liability is not yet clear, although it is very possible that the agency will seek to voluntarily dismiss those cases, as it did with cases alleging discrimination on the basis of transgender status following the administration’s executive order setting forth its policy with respect to gender identity.

Background

Disparate impact is a theory of liability under civil rights laws in which a facially neutral practice (for example, a credit check or aptitude test to screen job applicants) has a disproportionately adverse effect on a protected class of individuals. Unlike disparate treatment liability, which requires proof of intentional discrimination, disparate impact liability arises from the use of a neutral practice and requires no showing of intent to discriminate.

Disparate impact was first recognized as a viable theory of discrimination by the U.S. Supreme Court in Griggs v. Duke Power Company, 401 U.S. 424 (1971). In Griggs, the Court addressed an employer’s requirement that to be employed in its highest paying departments, an employee had to have a high school diploma, or pass tests of mechanical aptitude and IQ. White employees were almost 10 times more likely than Black employees to meet these requirements. The Court held that absent a showing of business necessity, the use of a test that disproportionately screens out individuals in a protected category is unlawful. 

In 1991, via the Civil Rights Act of 1991, Congress codified disparate impact liability in Section 703(k) of Title VII. Under Section 703(k), an individual has the burden of proof to show that a particular employment practice has a disparate impact (usually by use of statistical evidence). The burden then shifts to the employer to show that the practice is “job related for the position in question and consistent with business necessity.” If the employer is able to prove that the practice is justified by business reasons, a plaintiff may still prevail if it can show an equally effective alternative employment practice that does not have an adverse impact and which the employer refused to adopt. That law remains on the books insofar as an executive order cannot “unwrite” a law written by Congress.

What does this mean for employers?

The executive order makes clear that the administration is unlikely to pursue investigations or bring new litigation based on a theory of disparate impact liability. Employers are cautioned, however, that unless and until changed by Congress, disparate impact liability is a viable theory of discrimination under Title VII, and while plaintiffs must bring a charge alleging such discrimination to the EEOC in the first instance, they ultimately are able to bring private suit in federal court absent any involvement by the EEOC. Moreover, many states impose laws establishing disparate impact liability under their state non-discrimination laws (although the order instructs the attorney general to examine whether any such laws are preempted by federal law or otherwise “have constitutional infirmities that warrant Federal action”). Employers facing challenges to employment practices or charges of discrimination alleging disparate impact liability are advised to consult with counsel. 

Littler’s WPI will keep readers apprised of relevant developments.