by On April 23, 2025, the President issued an Executive Order (EO) regarding disparate impact liability in pursuing claims of discrimination. The EO states:
“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.”
Disparate impact liability occurs when an employer has what appears to be a neutral policy or practice that disproportionately negatively impacts a group of individuals based on a protected characteristic. The courts have recognized disparate impact as a basis for employment discrimination liability for more than fifty years. In 1971, the U.S. Supreme Court held that a hiring policy that required candidates to have a high school diploma had a disproportionate impact on Black job candidates. The employer could not show that a high school diploma was needed to perform the relevant jobs. The Court held that the plaintiffs did not need to show intent to discriminate and that such disparate impact was a violation of Title VII of the Civil Rights Act. In 1991, Congress passed a law that codified disparate impact liability as discrimination for Title VII cases. Disparate impact liability also became part of the Age Discrimination in Employment Act and the Americans with Disabilities Act enforcement.
The EO does not change existing case law nor statutes regarding disparate impact liability. It does, however, affect how federal agencies such as the Department of Justice and the Equal Employment Opportunity Commission proceed in performing their roles under various civil rights laws and regulations. A White House fact sheet on the EO identifies the following directives from the EO:
- Actions by previous administrations approving disparate impact liability are revoked.
- All agencies are to deprioritize enforcement of statutes and regulations that include disparate impact liability.
- The Attorney General is to amend all Title VII regulations on race discrimination that consider disparate impact liability.
- Agencies are to assess all pending investigations, lawsuits, and consent judgments that rely on a theory of disparate impact liability and take appropriate action.
What Happens Next?
The EO and the White House fact sheet explains in broad terms what is expected of federal agencies as a result of the directives. We do not know how the actions or omissions of federal agencies based on the EO will affect pending or future claims and cases. The EO does not affect liability for intentional discrimination against applicants or employees based on a protected characteristic (known as disparate treatment liability). It is anticipated that the various enforcement agencies will focus their efforts on disparate treatment claims and discontinue enforcement of disparate impact cases. Agency action is not required for individuals or groups of individuals to take or continue legal action based on claims of disparate impact. The EO has no direct impact on how the many state laws that recognize disparate impact liability will be handled by state agencies or courts.
Nevertheless, the EO creates a significant shift in employment law and related civil rights matters. Employers with pending federal cases involving claims of disparate impact discrimination should consult their legal counsel on how these changes may or may not affect their defense strategies.
