On April 23, 2025, President Trump issued an Executive Order titled “Restoring Equality of Opportunity and Meritocracy” (the Order). Through this Executive Order, and accompanying Fact Sheet, the Trump Administration characterizes disparate impact liability as unlawful and states that it “not only undermines our national values but also runs contrary to equal protection under the law and, therefore, violates our Constitution.” The Order bars federal agencies from relying on the disparate impact theory in their enforcement of anti-discrimination laws, including Title VII of the Civil Rights Act of 1964 (addressing employment discrimination) and Title VI (addressing discrimination in education), and seeks to eliminate its use “in all contexts to the maximum degree possible.”
Under Title VII and other civil rights laws, discrimination claims may be made under two main theories: disparate treatment (which involves intentional discrimination) and disparate impact (which addresses unintentional discrimination). Under the disparate-impact theory, policies or practices that appear to be facially neutral may still be found to be discriminatory if they disproportionately and adversely affect members of a protected class. The theory was first articulated by the U.S. Supreme Court in Griggs v. Duke Power Co., which held that Title VII “proscribes not only overt discrimination, but also practices that are fair in form but discriminatory in operation.” When faced with a disparate impact claim in the employment context, employers must show that the challenged policy or practice is job-related and consistent with business necessity.
The disparate impact theory was codified into the statutory provisions of Title VII in 1991. (42 U.S.C. 200e-2(k)). While the disparate impact theory is not explicitly addressed in the statutory provisions of Title VI, disparate impact is recognized in its implementing regulations. Over the past several decades, disparate-impact liability has become engrained in civil rights laws that touch a wide variety of fields, including employment, access to credit, government contracting, housing and education.
The Order states that “disparate-impact liability has hindered businesses from making hiring and other employment decisions based on merit and skill” and “imperils the effectiveness of civil rights laws by mandating, rather than proscribing, discrimination.”
The Order reflects a fundamental shift in the enforcement of civil rights law by focusing exclusively on intentional discrimination and outlines the following directives to federal agencies:
- Deprioritize the enforcement of all statutes and regulations to the extent that they include disparate-impact liability;
- Identify and repeal regulations or guidance that utilize the disparate impact framework (this appears to apply not just to Title VI, but also to Title VII, the Fair Housing Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Equal Credit Opportunity Act);
- Roll back the implementation of Title VI for all agencies with respect to disparate impact liability, which shall include revocation of the Presidential approval of Department of Justice Title VI regulations that address disparate-impact liability;
- Review pending investigations, civil suits, injunctions and consent decrees in which the government has relied upon disparate impact theory and “take appropriate action with respect to such matters” consistent with the policy of the Order;
- Examine whether state laws using the disparate impact theory may be preempted by federal authority or whether such “laws, regulations, policies or practices have constitutional infirmities that warrant Federal action.”
The Order may be of particular interest to employers because of the potential impact on employment practices, and its effect on currently pending cases, audits and investigations that the government has brought based on a disparate-impact liability theory. However, due to the extensive case law that has explicitly recognized the disparate-impact theory, private individuals will likely still be allowed to pursue disparate impact claims, provided courts continue to recognize them as legally cognizable.
In the Fact Sheet accompanying the Order, President Trump is described as “a champion of individual merit and fairness” and the shift away from disparate impact is suggested to be part of a broader philosophy that aligns with President Trump’s other recent executive orders aimed at eliminating affirmative action and diversity, equity and inclusion (DEI) programs. Many of those previous orders have faced legal challenges and, in some cases, have been enjoined. It is possible that this Order may face similar legal challenges.
Bond continues to follow these and related developments closely. Please contact Christa Cook, Gavin Gretsky or the Bond attorney with whom you normally work, with any questions.