Federal Agencies Directed to End Enforcement of Disparate Impact Discrimination Claims Under President Trump’s New Executive Order
Topics: Discrimination, Harassment & Retaliation, New Laws & Legislation
On April 23, 2025, President Trump issued an Executive Order entitled “Restoring Equality of Opportunity and Meritocracy” (“Executive Order”). This Executive Order is one in a series issued by President Trump with the goal of eliminating Diversity Equity and Inclusion (“DEI”) policies and practices. This Executive Order focuses on dismantling legal claims for discrimination based on a disparate impact theory of liability.
Under the Title VII of the Civil Rights Act of 1964 and the California Fair Employment and Housing Act (“FEHA”), among many other federal and state laws, disparate impact liability exists where a neutral policy or practice is shown to have a disproportionately negative effect on a protected group, such as race, national origin, and gender, regardless of intent. There are various legal defenses to disparate impact claims, including showing that the policy or practice is “job-related” or based on a legitimate “business necessity.”
Notwithstanding available affirmative defenses, the new Executive Order broadly asserts that it will “eliminate the use of disparate-impact liability in all contexts.” The Order cites concerns that potential disparate impact claims hinder businesses from making hiring decisions, undermine national values, and are contrary to equal protection under the law. For now, the Executive Order does not change existing law authorizing claims for disparate impact liability because such changes must be handled through the formal regulatory rulemaking or legislative process.
The Executive Order also lays out various steps the Trump Administration intends to take to curtail the use of disparate impact claims in the near future. The Executive Order instructs federal agencies (such as the EEOC)not to pursue administrative claims based on disparate impact liability. Next, the Executive Order requires a review of any pending federal investigations, civil suits, injunctions, and positions taken in ongoing cases to ensure they are consistent with the new Order. Agencies may dismiss pending claims and refuse to advance arguments based on a disparate impact theory, although private litigants will be able to continue to use that theory in their claims.
The EEOC has also been directed to issue guidance and technical assistance to employers to find measures to promote equal access to employment for applicants “regardless of whether [they have] a college education.” While a college education is typically considered a neutral job-requirement (that the Executive Order is intended to support), the Executive Order appears to single out college education as one factor that should not impede access to employment generally. The Executive Order did not explain the basis for this provision under the Purpose section (Section 1).
Finally, the Executive Order instructs the Attorney General to repeal or amend regulations that authorize disparate impact liability based on race, color and national origin discrimination under Title VI of the Civil Rights Act of 1964 (for institutions that receive federal financial assistance). Similarly, the Executive Order states that the Attorney General should try to curtail any disparate impact laws at the state level, including assessing whether arguments can be made that state laws are preempted by federal law or otherwise violate the Constitution.
Summary
In sum, with this Executive Order, employers can expect to face less scrutiny from the EEOC of their policies and practices based on their alleged disparate impact. Litigants would still be able to rely on existing federal statutes, regulations and a developed body of court decisions endorsing disparate impact theories of liability. State law claims based on a disparate impact theory remain in effect, including in California, where the claim is recognized under state statutes such as FEHA.
We will continue to monitor and report on new developments in this area as further guidance is issued by the administration.
Upcoming Webinar: The Future of DEI for California Employers in a Shifting Legal Landscape
CDF will be hosting a complimentary webinar to further explore the impact of recent federal executive orders, including this latest directive concerning disparate impact claims. Join our panel of CDF attorneys for an insightful discussion on ”Upcoming Webinar: The Future of DEI for California Employers in a Shifting Legal Landscape,” this Wednesday, April 30, from 10-11 am (Pacific) – Register HERE to reserve your spot.
