On Wednesday, April 23, 2025, President Trump signed EO 14281, titled Restoring Equality of Opportunity and Meritocracy (EO), stating a new Trump Administration policy “to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible . . . .”
We, along with several of our colleagues, already explained this EO, but this shift in federal policy – barely noticed by most people amidst myriad controversies, memes, and crypto schemes, as well as a number of other executive orders – is important enough to warrant further consideration by anyone who manages workplaces and those of us who advise employers about civil rights laws. As a cover story in the Sunday, May 11, 2025 issue of the New York Times observed, the EO’s directive to curtail the use of disparate impact liability is part of a larger effort to “purge the consideration of diversity, equity and inclusion, or D.E.I., from the federal government and every facet of American life. . . .” and focuses on “the nation’s bedrock civil rights law.”
The Genesis of Disparate Impact Liability
In 1971, the Supreme Court of the United States (SCOTUS) recognized in Griggs v. Duke Power Co. that Title VII of the Civil Rights Act of 1964 “proscribes not only overt discrimination but also practices that are fair in form, but discriminatory in operation.” Thus, in the first case in which SCOTUS addressed such a Title VII claim on the merits, the Court approved disparate impact as a theory of liability under Title VII; i.e., that a plaintiff can establish a prima facie case of discrimination by showing that a facially neutral employment policy disproportionately excluded members of a protected class at a statistically relevant level.
Two years after the Supreme Court held in Wards Cove Packing Co. v. Atonio that employers defending a disparate impact claim need only “produce evidence of a legitimate business justification” for the policy in question, Congress amended Title VII with the Civil Rights Act of 1991 (CRA). The CRA requires defendants to prove that a neutral employment policy with a statistically significant adverse impact on a protected class was job related and consistent with business necessity, a more difficult standard to meet than the standard set in Wards Cove. See 42 U.S.C. § 2000(e)-2 (k), the statutory provision on “Burden of proof in disparate impact cases” that Congress created and President George H.W. Bush approved.
In 2009, in Ricci v. DeStefano, a divided SCOTUS addressed whether an employer that engages in “disparate treatment” can justify doing so to avoid “disparate impact” liability. The majority held that an employer may do so only if it can prove its reasoning under a “strong-basis-in evidence” standard.
Concurring with the majority, Justice Scalia amplified the argument that the disparate impact provisions in Title VII are at odds with the Constitution’s equal protection clause. This viewpoint has won favor in certain corners of legal scholarship. See, for example, a Harvard Journal of Law & Public Policy discussion of disparate impact by Pacific Legal Foundation Fellow Alison Slomin, and an article posted by the Federalist Society asking whether the disparate impact doctrine is unconstitutionally vague.
The Actual Impact of “Disparate Impact”
The EO takes such arguments even further, calling disparate-impact liability “a near insurmountable presumption of unlawful discrimination [that] exists where there are any differences in outcomes in certain circumstances among different races, sexes, or similar groups, even if there is no facially discriminatory policy or practice or discriminatory intent involved, and even if everyone has an equal opportunity to succeed.” Case law, however, indicates that establishing this “near insurmountable presumption” is not so easy.
Title VII requires an employer to prove the business necessity for a policy in question only after a plaintiff has met the burden of proving that a disparate impact exists to a statistically significant degree. And — as Mark Twain said — “There are three kinds of lies: lies, damned lies and statistics.”
A good statistics expert for the defense can stop a disparate impact claim in its tracks by identifying statistical fallacies in a plaintiff’s alleged statistical proof of disparate impact. A plaintiff must also demonstrate that the policy in question caused the disparity, which is no easy task.
Further, a mere finding of disparate impact does not mean that the plaintiff wins the lawsuit. Rather, establishing the existence of a statistically significant disparate impact establishes only a prima facie case of discrimination, not liability under Title VII (or any other anti-discrimination statute).
If a disparate impact plaintiff establishes a prima facie case, the burden of persuasion then shifts to the defendant to prove that the policy is job related and consistent with business necessity. The defendant’s burden can be simplified to one inquiry: whether the policy concerns an essential job function. For example, is it an essential function of a lifeguard to be able to swim?
Indeed, scholars have argued that disparate impact liability has proven to be a fairly limited tool for plaintiffs claiming discrimination.
Seeking a “Colorblind” Meritocracy, But What About Other Protected Classes?
The EO asserts that disparate-impact liability “all but requires individuals and businesses to consider race and engage in racial balancing to avoid potentially crippling legal liability” and concludes that disparate-impact liability is unconstitutional. The disparate impact theory, however, is not limited just to race. The EO does not mention that the disparate impact theory is available in other Title VII cases based on sex, national origin, color and religion. To a lesser extent, it can apply to cases brought under the Age Discrimination in Employment Act (ADEA) and the Americans with Disabilities Act (ADA), too. However, an employer’s burden to defend against an ADEA claim is only to establish a reasonable factor other than age. Further, because of the detailed factual showing required in ADA cases, disparate impact ADA claims are not often available.
The EO also declares that treating people as individuals “encourages meritocracy and a colorblind society” as opposed to “race- or sex-based favoritism.” Notably, while Title VII makes it illegal to discriminate against any individuals on the basis of a protected class, the first sentence of the EO states that equal treatment of all citizens is a bedrock principle of the United States.
Under Title VII, it is illegal for employers to discriminate against any individual based on race, color, religion, sex, or national origin. The Equal Employment Opportunity Commission (EEOC) issued Enforcement Guidance on National Origin Discrimination in 2016, along with a Q&A that notes that Title VII’s “protection against national origin discrimination extends to all employees and applicants for employment in the United States, regardless of their place of birth, authorization to work, citizenship, or immigration status.” When the EEOC has a quorum of Trump appointees, that Guidance may be reconsidered, although a change to the statute will still require an act of Congress.
What it All Means, in Practice
Title VII as amended (including the Civil Rights Act of 1991) is still the law of the land, and the laws of many states may permit or require that adverse impact analyses be performed in certain circumstances. It thus still makes good sense to continue utilizing adverse impact analyses as a risk mitigation tool, under the privileged guidance of counsel.
In addition, with the EO’s overt message on federal government enforcement policy with respect to Title VII (and, for that matter, Title VI), employers should be able to rely on the EO to stop a federal government investigation that centers on an employment practice or policy allegedly causing a disparate impact in violation of Title VII. For example, employers now should be able to convince the EEOC to dismiss a race charge of discrimination as to a facially neutral policy or practice attacked only under a disparate impact theory.
Moreover, while the EO does mention the word “age,” it does not mention “disability” and does not cite to either the ADEA, 29 U.S.C. § 621, et seq., or the ADA, 42 U.S.C. § 12101, et seq. It seems likely that, given the EO’s clear position as to the disparate impact theory of discrimination, this Administration will also not continue an investigation or litigation premised on a disparate impact theory in violation of these laws. Accordingly, employers may likewise be able to get the EEOC or the U.S. Department of Justice to stop investigations of such claims.
Many of the (thus far) 147 executive orders issued since January 20, 2025, have been challenged in court; as of May 7, 2025, at least 228 actions have been filed, many resulting in preliminary injunctions blocking all or parts of these actions. It is unclear whether this EO will also garner a lawsuit, or if Congress will propose legislation to amend Title VII, or if the Administration will try to persuade the Supreme Court to agree with its declaration regarding the constitutionality of disparate impact theory. There is much to keep an eye on.