On April 23, 2025, the White House issued a sweeping Executive Order aimed at eliminating the use of disparate-impact liability across the federal government. Titled “Restoring Equality of Opportunity and Meritocracy,” the Order articulates a sharp departure from previous enforcement mechanisms in civil rights law, especially as they pertain to employment and anti-discrimination practices. A copy of the Executive Order can be found here.
This blog post breaks down the implications of the Executive Order, what it means for both employees and employers and how this shift may impact employment law moving forward.
What Is Disparate-Impact Liability?
Disparate-impact liability is a legal theory under U.S. civil rights law that holds that policies or practices may be deemed discriminatory if they have a disproportionately adverse effect on a protected group—even when those policies are facially neutral and lack discriminatory intent. It has been a longstanding tool used by federal agencies and courts to address systemic discrimination, particularly in the areas of employment, housing, and lending.
The foundation of this legal theory was laid in the landmark Supreme Court case Griggs v. Duke Power Co., 401 U.S. 424 (1971). In that case, the Court ruled that an employer’s requirement for a high school diploma and intelligence test for certain jobs—though neutral on its face—was discriminatory in effect, as it disproportionately excluded African American workers and was not demonstrably related to job performance. The Court emphasized that employment practices must be evaluated based on their actual impact and whether they serve a legitimate business purpose.
This principle was later codified by Congress in the Civil Rights Act of 1991, which formally amended Title VII to recognize disparate-impact claims by adding section 703(k), codified at 42 U.S.C. § 2000e-2(k). The amendments established that when an employment practice causes a significant adverse impact on a protected group, the burden shifts to the employer to show that the practice is job-related and consistent with business necessity. Even then, a plaintiff can prevail by demonstrating that an alternative practice exists that would serve the employer’s needs with less discriminatory impact.
This framework aimed to ensure equal access to employment opportunities and to correct systemic inequalities that might persist even in the absence of overt bias.
What Does the Executive Order Do?
It is important to note that an Executive Order does not create or repeal law. Only Congress can enact or amend statutory law, and courts are responsible for interpreting it. This Executive Order instead directs federal agencies—such as the Department of Justice (DOJ) and the Equal Employment Opportunity Commission (EEOC)—to deprioritize or cease enforcement actions based on the disparate-impact theory of liability.
The Order also revokes prior regulatory approvals and calls for a review of agency guidance that currently incorporates disparate-impact analysis. However, this does not eliminate the legal validity of disparate-impact liability. The statutory provisions under Title VII and case law like Griggs remain binding, and courts are still obligated to apply them.
As a result, while federal agencies may become less active in pursuing disparate-impact cases, private litigants still have the right to bring these claims to court. The framework set by Congress in 1991 remains intact, and judges will continue to hear and adjudicate disparate-impact lawsuits.
Key provisions of the Order include:
- Federal Policy Shift: Declares a national policy to eliminate disparate-impact liability wherever legally possible.
- Revocation of Prior Regulations: Revokes certain Presidential approvals for Department of Justice regulations under Title VI.
- Deprioritization of Enforcement: Instructs federal agencies to deprioritize enforcement of regulations that rely on disparate-impact theories.
- Agency Review Mandates: Orders the Attorney General and federal agencies to identify, review, and amend or repeal any existing policies, guidance, or enforcement actions that invoke disparate impact.
- Guidance for Employers: Mandates the issuance of updated guidance to employers that promotes equal access to employment without reliance on college degrees or other credentials that could contribute to disparate impacts.
Implications for Employees
The Executive Order may result in reduced federal enforcement of claims based on disparate impact. This shift means employees may be less likely to receive investigatory or litigation support from agencies like the EEOC for claims that rely solely on statistical disparities without direct evidence of intent.
However, it is crucial to understand that disparate-impact liability remains part of federal civil rights law. Private individuals retain the right to file lawsuits under Title VII based on disparate-impact theories. These claims remain valid and can be successful if they meet the legal standards established by statute and precedent.
Implications for Employers and Small Businesses
For employers, particularly small businesses, the Executive Order may ease concerns regarding federal scrutiny over hiring practices that result in statistical disparities. The perceived risk of agency-led disparate-impact investigations or enforcement actions may decline.
Nonetheless, employers must remain vigilant. Disparate-impact claims can still be brought by private plaintiffs under Title VII or under state laws, many of which continue to recognize and enforce such liability. Further, courts remain bound by the legal standards articulated in Title VII and applicable case law.
Employers should, therefore, continue evaluating employment policies for potential adverse impacts and ensure they can demonstrate that such policies are job-related and consistent with business necessity.
Looking Ahead: Legal and Political Uncertainty
The long-term impact of this Executive Order is uncertain. Future administrations may rescind or revise this policy. Additionally, litigation may arise to challenge agency non-enforcement or test the boundaries of executive authority.
Until then, the legal landscape for disparate-impact liability includes a gap between regulatory enforcement and legal viability. While federal agencies may deprioritize such cases, the courts remain open for employees and advocacy organizations to seek redress.
Conclusion
The Executive Order represents a shift in federal enforcement priorities—but it does not eliminate the legal viability of disparate-impact liability. The statutory and judicial framework remains in place, allowing private individuals to pursue such claims in court.
Employees should be aware that their rights under Title VII are unchanged, even if enforcement resources are redirected. Employers must continue to adhere to non-discrimination principles and exercise caution when implementing employment policies that could disproportionately affect protected groups.
Hoyer Law Group, PLLC, remains committed to protecting workplace fairness and guiding both employees and employers through the evolving legal landscape. Contact us today to learn how this change may affect you.
