Presidential Executive Order Seeks to Eliminate Disparate Impact Liability: Here’s What Employers Need to Know

On April 23, 2025, President Trump signed an Executive Order titled Restoring Equality of Opportunity and Meritocracy (the “EO”), marking a significant shift in federal civil rights enforcement.

The EO directs federal agencies to eliminate or deprioritize disparate impact liability “to the maximum degree possible,” fundamentally realigning federal enforcement around intentional discrimination and away from statistical disparities alone.

While the EO signals a major policy change, it does not alter the underlying statutes or U.S. Supreme Court precedent that recognize disparate impact as a valid legal theory. Private disparate impact claims under Title VII and state analogs remain available, and employers must continue to manage risks under the established disparate impact framework.

Legal Background: Disparate Impact in Statute and Case Law

The U.S. Supreme Court first recognized disparate impact liability under Title VII in Griggs v. Duke Power Co. (1971), which held that employment practices that are facially neutral but have a disproportionate adverse effect on protected groups are prohibited, unless the practice is job-related and consistent with business necessity.

In 1991, Congress amended Title VII to add Section 703(k), which codified how “an unlawful employment practice based on disparate impact” could be established. The U.S. Supreme Court in Washington v. Davis, 426 U.S. 229 (1976), distinguished constitutional intent requirements from Title VII’s broader statutory standard, which can reach facially neutral practices with unjustified adverse effects.

Understanding the Executive Order

• The EO instructs all federal agencies to deprioritize enforcement of statutes and regulations that include disparate impact liability, including key provisions of Title VI and Title VII of the Civil Rights Act of 1964 regulations.
• It revokes prior presidential approvals of the Department of Justice’s Title VI regulations pursuant to (28 C.F.R. § 42.104) supporting disparate impact and directs the Attorney General, the Equal Employment Opportunity Commission (the “EEOC”), and other civil rights enforcers to review and align all pending investigations, lawsuits, and consent decrees with the new policy.
• Agencies are also required to initiate action to either repeal or amend regulations under Title VI that contemplate disparate impact. The EO grounds its policy in a “colorblind” constitutional view, asserting that disparate impact is inconsistent with equal protection.
• However, the EO does not amend Title VII or other civil rights statutes, nor can it overrule Supreme Court precedent recognizing disparate impact in Griggs (Griggs v. Duke Power Co., 401 U.S. 424 (1971); Texas Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, 576 U.S. 519 (2015)).
• Private plaintiffs and state and local agencies may still bring disparate impact claims under federal or state law. The Uniform Guidelines on Employee Selection Procedures (29 C.F.R. § 1607) and the “four-fifths rule” remain relevant for analyzing adverse impact.

Immediate Enforcement Changes and Practical Implications

Federal agencies are now deprioritizing the pursuit of disparate impact theories in their investigations, conciliations, and litigation, including under Title VII and Title VI. The Department of Justice (DOJ), EEOC, and other civil rights agencies are reassessing—and potentially narrowing, dismissing, or reframing—cases and consent decrees premised on disparate impact.

Agencies are also conducting inventories of rules and guidance that support disparate impact, with an eye toward amending or repealing them. The federal government may withdraw positions supporting disparate impact theories or decline to file statements of interest that advance them.

For employers and federal contractors, this means federal scrutiny may ease, but private litigation and state enforcement will remain. Disparate impact claims under Title VII, as codified, continue to be viable in court. The Uniform Guidelines and the four-fifths rule remain widely used to assess adverse impact risk.

Employers must continue to document business necessity for selection devices (e.g., testing, minimum qualifications, background screens) that may disproportionately affect protected groups. Federal contractors must also continue affirmative action planning (41 C.F.R. § 60-2) and recordkeeping (29 C.F.R. § 1602).

State and Local Enforcement: Continued Relevance of Disparate Impact

Several state anti-discrimination laws premised on disparate impact liability remain in force, including under the California Fair Employment and Housing Act (Cal. Gov. Code § 12900 et seq.), New York Human Rights Law (N.Y. Exec. Law § 290 et seq.), and the Illinois Human Rights Act (775 ILCS 5/1-101 et seq.).

Employers should expect a divergence between federal and state enforcement philosophies, with active state agencies continuing to bring disparate impact cases.

Action Steps for Employers

In the short term, employers should take the following steps to comply with the EO:

• Audit their selection procedures, testing, educational requirements, background checks, and promotion criteria for potential adverse impact.
• Update business necessity rationales and validation studies tied to job requirements and successful performance, and maintain applicant flow and selection data to monitor impact and support defenses (29 C.F.R. § 1602).
• Confirm that testing, background screening, and HR tech vendors follow the Standards for Educational and Psychological Testing.

In the medium term, employers should follow these measures:

• Track agency guidance withdrawals, regulatory amendments, and litigation positions implementing the EO, and prioritize compliance where state enforcement is active.
• Adjust training for managers and recruiters to emphasize consistent, job-related criteria and careful documentation.
• Reassess strategy in EEOC/agency matters that previously turned on disparate impact theories.

Frequently Asked Questions

Does this EO Eliminate Disparate Impact Claims?

• Private plaintiffs may still bring disparate impact claims under Title VII and applicable state laws. The EO primarily changes federal enforcement priorities and agency rules.

Can Agencies Dismiss Pending Disparate Impact Cases?

• Agencies are reviewing matters and may narrow or dismiss the pending cases. Private parties, however, can proceed independently in court where permitted by state statutes.

Should Employers Stop Monitoring Adverse Impact?

• The Uniform Guidelines and four-fifths rule remain relevant benchmarks in litigation. Monitoring helps identify and address risk and supports business necessity defenses.

Are Diversity, Equity, and Inclusion (DEI) Programs Unlawful Under this EO?

• The EO does not directly regulate private DEI efforts. Programs should remain compliant with existing laws by avoiding quotas or race-based decision-making and focusing on job-related, inclusive practices and individualized assessments.

The Bottom Line for Employers

The EO marks a significant federal policy pivot away from disparate impact enforcement, but it does not rewrite the law. Employers can expect to face less scrutiny from the EEOC of their policies and practices based on their alleged disparate impact.

Title VII’s disparate impact framework remains intact for the courts and private litigants, and state laws continue to recognize such claims. Compliance best practices remain unchanged:

• Build job-related, well-validated, consistently applied criteria;
• Maintain strong records; and
• Align compliance across federal and state regimes to support fair, merit-based employment systems.

Read more about the Restoring Equality of Opportunity and Meritocracy EO on the White House website.