President Trump Signs Executive Order Regarding Disparate-Impact Liability
On April 23, 2025, President Trump issued an executive order entitled “Restoring Equality of Opportunity and Meritocracy.” The order aims to “eliminate the use of disparate-impact liability in all contexts to the maximum degree possible.”
Disparate-impact is a theory of discrimination applied when a facially neutral policy or practice has a statistically significant impact on a protected group. First recognized by the U.S. Supreme Court in Griggs v. Duke Power Co., 401 U.S. 424 (1971), disparate-impact theories of liability have also been recognized under fair housing and equal credit laws and other contexts. In 1991, the U.S. Congress amended Title VII of the Civil Rights Act of 1964 to add Section 703(k), which codified how an “unlawful employment practice based on disparate impact” could be established.
The executive order characterizes disparate-impact liability as creating “a near insurmountable presumption of unlawful discrimination … 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.” The executive order further states 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 “is wholly inconsistent with the Constitution.” To achieve this new policy, the executive order, among other items:
Orders all federal agencies to “deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability,” including, but not limited to, Title VII (Section 4).
Directs the repeal or amendment of certain regulations that impose disparate-impact liability on, and require affirmative action by, recipients of federal funding under Title VI, including nonprofits, universities, and certain federal contractors. Section 3 provides that it is revoking the “Presidential approval” of such regulations, while section 5(a) directs the U.S. attorney general to “initiate appropriate action to repeal or amend” those regulations.
Orders the U.S. attorney general and the chair of the Equal Employment Opportunity Commission (EEOC) to “assess all pending investigations, civil suits, or positions taken in ongoing matters under every Federal civil rights law within their respective jurisdictions” that utilizes a theory of disparate-impact liability within 45 days of the order. Section 6(a) again identifies matters pursuant to Title VII as an exemplar requiring specific review.
Orders all agencies responsible for enforcing the Equal Credit Opportunity Act, Title VII, the Fair Housing Act, and any other law “prohibiting unfair, deceptive, or abusive acts or practices” to “evaluate all pending proceedings that rely on” disparate-impact liability theories and to “take appropriate action” consistent with the order, also within 45 days of the order. Section 6(b) explicitly directs the U.S. attorney general, the secretary of Housing and Urban Development, the director of the Consumer Financial Protection Bureau, and the chair of the Federal Trade Commission to engage in such efforts.
Orders all federal agencies to “evaluate consent judgments and permanent injunctions that rely on theories of disparate-impact liability and take appropriate action” within 90 days of the order (Section 6(c)).
Orders the U.S. attorney general and other federal agencies to “determine whether any Federal authorities preempt State laws, regulations, policies, or practices that impose disparate-impact liability based on a federally protected characteristics such as race, sex, or age, or whether such laws, regulations, policies, or practices have constitutional infirmities that warrant Federal action” and take actions consistent with the order (Section 7(a)).
Orders the U.S. attorney general and the EEOC chair to jointly create “guidance or technical assistance to employers” about “appropriate methods to promote equal access to employment regardless of whether an applicant has a college education, where appropriate” (Section 7(b)).
Practical Considerations
Federal agencies will not likely initiate investigations or enforcement actions that rely on disparate-impact theories. As a result of the order, they may also close, dismiss, or narrow existing investigations, lawsuits, and ongoing monitorships pursuant to consent decrees or other agreements where disparate-impact liability is the underlying legal theory. Such agencies may also seek to repeal or amend regulations and guidance documents imposing or recognizing disparate-impact liability, including affirmative action regulations that address disparate-impact liability. See 29 C.F.R. Part 1608.
The order also has implications in the selection and testing arena, including for AI developers and deployers, as it signals that the current administration may not allocate investigation, enforcement, or litigation resources to disparate-impact claims against employers using AI tools or other tests.
Despite this, private individuals can continue to bring litigation invoking disparate-impact theories, and the order has no immediate impact on existing disparate-impact case law. Still, litigation prompted by the order may lead courts to reconsider precedents upholding theories of disparate-impact liability.
The potential enforcement priority shift stemming from this executive order may create complex interactions with private rights of action under federal law, state law protections, and local ordinances that continue to recognize disparate-impact liability. For example, disparate-impact components are present in local laws like New York City’s Human Rights Law and a new proposed rule from New Jersey’s Division on Human Rights. States like Colorado and Illinois have passed new laws effective Feb. 1, 2026, and Jan. 1, 2026, respectively, that aim to address unlawful bias arising from an employer’s use of AI for employment decisions. Other state legislatures are also considering new laws. However, as noted, the current administration will evaluate potential preemption of these and other laws and regulations.
Employment Law This Week Episode – 100 Days In – What Employers Need to Know [Video, Podcast]
This week, we’re bringing you a special episode on the first 100 days of the Trump administration, in which we highlight sweeping policy shifts, battles at the National Labor Relations Board (NLRB); revisions to diversity, equity, and inclusion (DEI) programs; the rapid evolution of artificial intelligence (AI) in the workplace; and more.
100 Days In: What Employers Need to Know
The current administration has reached the 100-day mark, and employers have faced sweeping changes and major policy shifts—but not everything has moved at the same pace. While DEI programs and workplace AI have faced significant revisions, other areas, such as the NLRB, have been marked by board member disputes and ongoing court battles, adding layers of uncertainty.
This week’s key topics include:
DEI program scrutiny,
independent agency challenges,
rescinded policies from past administrations, and
AI workplace guidance.
In this special episode, Epstein Becker Green attorneys unpack these significant changes and provide actionable insights for navigating the regulatory and compliance chaos.
New Executive Order Seeks To Limit Disparate Impact Liability
On April 23, 2025, the Administration issued a new Executive Order entitled “Restoring Equality of Opportunity and Meritocracy” along with an accompanying fact sheet. The Executive Order shifts how the federal government approaches civil rights enforcement and how it will analyze allegations of discrimination. Specifically, the Order limits the federal government’s ability to rely on the disparate impact theory of discrimination in its investigations and enforcement actions.
Notably, the Executive Order does not change existing federal discrimination law or court precedent. Executive Orders do, however, impact federal agency interpretations, and agencies usually begin to effectuate Executive Orders by issuing non-binding agency guidance and binding regulations (through the rulemaking process), revising policies, altering enforcement priorities, and even changing the content and language on government websites and in publications.
There are currently two main theories of liability under federal discrimination law:
Disparate treatment, which is intentionally treating someone differently because of their legally protected status; and
Disparate impact, which is when policies or practices are neutral on their face, but result in unequal outcomes among different protected groups. Under this liability framework, even unintentional disparities could lead to claims of discrimination.
By limiting or ending use of the disparate impact legal theory, the Executive Order seeks to require federal agencies to change their interpretation and enforcement of decades of court precedent, agency guidance, and law. The effect could be that an individual or agency, seeking to enforce federal discrimination law through agency enforcement and Department of Justice law suits could only show that they were discriminated against by a business, employer, or institution of higher education if that individual showed that they were treated differently because of their legally protected class, rather than also using a disparate impact theory of liability.
The Executive Order instructs federal agencies and the Department of Justice to:
Amend or repeal Title VI regulations and policies that incorporate disparate impact theories.
Review all other regulations, guidance, rules, or orders—including laws and decisions at the state level—that impose disparate impact liability requirements and recommend their amendment, repeal, or other appropriate measures to address them.
Reevaluate current lawsuits and federal investigations relying on disparate impact theories.
Deprioritize enforcement based on disparate impact theories ; and
Determine whether federal authority pre-empts state laws, regulations, policies, or practices that impose disparate impact liability.
This Executive Order is one of several EOs recently issued by the Administration seeking to change existing diversity, equity, and inclusion (DEI) initiatives. For businesses, employers, and institutions of higher education, the implementation of this Executive Order by the DOJ, EEOC, and U.S. Department of Education, among other federal investigatory agencies, have impact how pending and future civil rights investigations are handled.
Consult outside counsel with any concerns related to compliance with federal discrimination law and enforcement actions and investigation by the Department of Education or other executive agencies.
New Executive Order Addresses Disparate Impact Liability: Key Implications for Employers
On April 23, 2025, President Trump signed Executive Order 14281, Restoring Equality of Opportunity and Meritocracy (the “EO”).
This EO states its purpose as a solution to claims of employment discrimination based on “disparate-impact liability,” characterized as a “key tool” of a “pernicious movement” that threatens the foundation of the American Dream. The EO states a policy goal of eliminating “the use of disparate-impact liability in all contexts to the maximum degree possible” and includes numerous provisions that will affect federal agency enforcement priorities and may influence employer practices.
This Insight explains the concept of disparate impact liability, analyzes the EO and its directives, and provides practical considerations for employers.
What Is 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 (“Title VII”) “proscribes not only overt discrimination but also practices that are fair in form, but discriminatory in operation.” Practically speaking, SCOTUS thus gave its imprimatur to claims where there was a statistically significant showing that a practice or policy adversely impacted a protected class, even though the practice or policy appeared fair or neutral on its face. Congress codified the burden of proof in disparate impact cases at 42 U.S.C. § 2000(e)-2 (k), when it passed the Civil Rights Act of 1991.
In 2009, a divided SCOTUS decided Ricci v. DeStefano, addressing 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. In a concurring opinion, Justice Scalia foreshadowed current events, writing that “the war between disparate impact and equal protection will be waged sooner or later. . . .” Justice Ginsburg argued in a dissent that neither Congress’s statutes nor Court precedent offered “even a hint of ‘conflict’ between an employer’s obligations under the statute’s disparate-treatment and disparate-impact provisions. . . .”
The EO’s Characterization of “Disparate Impact”
The EO describes disparate impact liability as “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.” It does not mention that the different outcomes must be statistically significant to require an employer to show business necessity—or, in the case of age, reasonable factors other than age—for the employment practice at issue. The EO goes on to state that “[d]isparate-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 administration’s position is that equal treatment of all citizens is a bedrock principle of the United States and that this principle “guarantees equality of opportunity, not equal outcomes.”
How the EO Seeks to Diminish Disparate Impact Liability
No executive order can rewrite a statute, overrule case law, or authoritatively declare what is and is not constitutional. Thus, the legal impact of the EO on a lawsuit brought by a private plaintiff is de minimis, at best.
The EO, however, establishes three clear, tangible directives as to what the enforcement policy of the Trump administration will be with respect to Title VII and other anti-discrimination laws. These directives are as follows:
1. Federal Agencies Required to Assess Policy and Practices
The EO directs all agencies to take these concrete actions:
De-prioritize enforcement of any statutes and regulations related to disparate impact liability, including, but not limited to, the aforementioned provision of Title VII.
By May 23, 2025 (45 days after the issuance of the EO), in conjunction with the U.S. Attorney General, submit a report on:
an inventory of existing regulations, guidance, rules, and orders that “impose disparate-impact liability or similar requirements”;
a plan to amend or repeal such provisions; and
“other laws or decisions, including at the State level, which impose disparate-impact liability and any appropriate measures to address any constitutional or other legal infirmities.”
By July 22, 2025 (90 days after the issuance of the EO), review “all existing consent judgments and permanent injunctions that rely on theories of disparate-impact liability” with a view toward taking any legal action consistent with the administration’s policy.
2. Equal Employment Opportunity Commission (EEOC) and Department of Justice (DOJ) to Lead EO Compliance
EEOC Acting Chair Andrea Lucas and the Attorney General are directed to do the following:
By June 7, 2025, assess all pending investigations, civil suits, and other matters that “rely on a theory of disparate-impact liability” and “take appropriate action with respect to such matters . . . .” Note that this directive extends to heads of other federal agencies, including the Federal Trade Commission, the Consumer Financial Protection Bureau, and the Department of Housing and Urban Development.
“Jointly formulate and issue guidance or technical assistance to employers regarding appropriate methods to promote equal access to employment regardless of whether an applicant has a college education” (emphasis added).
3. Attorney General to Examine Conflicts with State and Local Laws
The EO also directs the Attorney General, in coordination with other agencies, to “determine whether any Federal authorities preempt State laws, regulations, policies, or practices that impose disparate-impact liability based on a federally protected characteristic such as race, sex, or age, or whether such laws, regulations, policies, or practices have constitutional infirmities that warrant Federal action, and shall take appropriate measures consistent with the policy of this order.”
What This EO Does (and Doesn’t Do)
It must be emphasized that, while this EO represents the present administration’s enforcement priorities and interpretation of Title VII and related equal opportunity laws, it does not change the law for most employers. Unlike prior executive orders that eliminated requirements for federal contractors and rescinded other long-standing federal policies, this EO does not revoke prior executive orders.[1] Nevertheless, it represents a shift in enforcement priorities that sharply contrasts with those of prior administrations.
As we have previously reported, EEOC Acting Chair Lucas has made her positions and priorities clear through numerous actions, publications, and statements, including prepared remarks she read at a conference in May 2024, titled “The Future of DEI, Disparate Impact, and EO 11246 after Students for Fair Admissions v. Harvard/UNC.” Likewise, on February 5, 2025, Attorney General Pam Bondi issued a Memorandum to all DOJ employees, advising them to revise all departmental materials and guidance to “narrow the use of ‘disparate impact’ theories.”
Further, even though President Trump has removed EEOC Commissioners and not yet nominated replacements (thus leaving the EEOC without a quorum and technically unable to issue technical assistance or new regulations), Acting Chair Lucas and the DOJ have already issued joint guidance aligned with the President’s earlier executive orders. These agencies can be expected to comply with this EO’s directive to publish new guidance regarding “appropriate methods to promote equal access to employment regardless of whether an applicant has a college education.”[2] How this will be accomplished remains to be seen.
The shift in enforcement priorities may affect ongoing cases initiated or joined under prior administrations. For example, a question of disparate impact is central to current litigation in the novel realm of artificial intelligence (AI) and its effects on workplaces. In one notable ongoing case, claims that arose from the use of automated selection tools include a cause of action based on disparate impact under Title VII. Whether the EEOC will withdraw or amend its prior filings in this or other pending cases is among the many questions raised by the EO.
Further, while the EO mentions the word “age,” it does not mention “disability” or cite to either the Age Discrimination in Employment Act (ADEA) or the Americans with Disabilities Act (ADA). It seems unlikely that, given the EO’s clear position rejecting the disparate impact theory of discrimination, this administration will want to continue an investigation or litigation premised on a disparate impact theory in violation of the ADEA or the ADA. Accordingly, employers may likewise be able to get the EEOC or DOJ to stop investigations of such claims.
State and Local Laws Preempted?
Another potentially significant issue raised in the EO creates the specter of conflict with state and local jurisdictions. The EO directs the Attorney General to work with other agencies to search for “constitutional infirmities” in any “[s]tate laws, regulations, policies, or practices that impose disparate-impact liability based on a federally protected characteristic such as race, sex, or age.”
Indeed, numerous jurisdictions have adopted—or are currently considering—laws that rely on disparate impact theory to prohibit discrimination. For employers, a significant and growing body of law regulating the use of AI in employment-related decision-making tools (as well as consumer protection laws) requires a disparate impact analysis to ensure the use of such systems does not result in disparate selection outcomes. Some laws also obligate employers to report the results of such analyses publicly or to state regulatory agencies.
Practical Implications for Employers
The EO should not signal to employers that they must immediately stop analyzing potential outcomes of employment decisions and cease conducting adverse impact analyses, particularly in appropriate contexts, such as layoffs or reductions in force (RIFs). Prudence dictates that it may now be more important than ever to exercise due caution and consult with counsel to ensure that any analysis or use of adverse impact analysis is conducted appropriately, lawfully, and under attorney-client privilege, to the extent possible.
Employers should recognize that the EO is an expression of Executive Branch policy, clarifying that the administration will not recognize claims or pursue investigations, administrative enforcement actions, or litigation based on disparate impact theories of liability. This does not foreclose all liability under federal (or state or local) law, as the EO does not obviate the risk of disparate impact-type claims being asserted in civil litigation.
Moreover, statistical adverse impact analysis is used for many purposes in various contexts. For example, in the case of RIFs, it is merely a risk measurement tool used to assess whether a potential discrimination litigation risk exists based on the foreseeable outcomes of an employer’s layoff selection criteria and process.
That said, the EO highlights the danger of misusing disparate impact analysis as the basis for making employment decisions in order to achieve balanced representation of employees in protected categories. Employers must take care to consult with knowledgeable employment counsel to ensure that disparate impact analysis is utilized in a legally appropriate manner and performed in a way that reduces, rather than increases, the risk of potential discrimination claims.
What Employers Should Do Now
While Title VII and other federal equal opportunity laws remain unchanged, employers must understand that the shift in the current administration’s priorities is likely to result in changes to how federal agencies will enforce Title VII and other equal opportunity laws. To be prepared, employers should consider doing the following:
If you are a party to an existing disparate impact claim before a federal agency—including recently settled or disposed matters—consider whether further action may be warranted in light of the EO’s directive to cease prosecuting adverse impact claims and to evaluate existing consent judgments and permanent injunctions that relied on disparate impact analysis.
Consider the impact of the EO on pending civil litigation and the viability of claims based on disparate impact theory. Assess whether any action might be taken to settle or dismiss such claims or causes of action.
Remain alert for the issuance of further guidance from the EEOC and the DOJ, as well as the removal or revision of existing materials.
Be aware that the EO heightens the level of awareness and sensitivity on the concept of “disparate impact,” which, in turn, elevates the importance of conducting disparate impact analyses under the attorney-client privilege. Therefore, if an adverse impact analysis is to be performed, strongly consider proceeding only after consulting knowledgeable employment counsel to identify potential discrimination litigation risks, avoid misusing impact analysis that could yield arguably discriminatory decision-making, and ensure compliance with applicable law barring employment decisions based on legally protected categories, such as race, sex, national origin, or age.
ENDNOTES
[1] To the extent that the EO purports to amend existing regulations (without adherence to the Administrative Procedures Act that generally governs federal rulemaking), those regulations apply to entities that receive federal financial assistance from the DOJ under Title VI—not Title VII—of the Civil Rights Act of 1964.
[2] Educational status is not a protected class under federal law. The discriminatory effects of educational achievements as prerequisites for employment were at issue in Griggs, the 1971 case codified in the 1991 legislation on “Disparate Impact.”
Elizabeth A. Ledkovsky contributed to this article
Recent Legal and Regulatory Developments Involving Gender-Affirming Care
On January 28, 2025, President Trump signed Executive Order 14187 (the “EO”), which directed the federal government to take steps to ensure that the federal government does not “sponsor, promote, assist, or support” the “‘transition’ of a child from one sex to another,” including the provision of gender-affirming care to individuals under the age of nineteen. Specific provisions of the EO directed, among other things, that: (1) all federal agencies rescind or amend all policies relying on guidance issued by the World Professional Association for Transgender Health; (2) federal agencies that provide research or education grants to hospitals and medical schools take “appropriate steps” to ensure that institutions receiving federal research or education grants end gender-affirming care to individuals under the age of nineteen; (3) the Secretary of the Department of Health and Human Services (“HHS”) take all appropriate regulatory and legal action to end gender-affirming care for individuals under the age of nineteen—such as through Medicare or Medicaid conditions of participation or conditions for coverage, clinical-abuse or inappropriate-use assessments relevant to State Medicaid programs; (4) the U.S. Attorney General to enforce an existing federal law against “genital mutilation” (18 U.S.C. § 116), and coordinate with state attorneys general to enforce state laws against gender-affirming care; and (5) the Director of the Office of Personnel Management include provisions in the Federal Employee Health Benefits and Postal Service Health Benefits programs call letter for the 2026 plan year specifying that eligible carriers exclude coverage for pediatric transgender surgeries or hormone treatments.
Federal Government Responses
The provisions of the EO related to research and education grants have been enjoined by two different federal courts (which are pending on appeal): (1) in the Western District Court of Washington, with the injunction only to apply to the states of Washington, Minnesota, Oregon, and Colorado, and (2) in the District Court of Maryland, with the injunction applying nationwide, though an emergency order to enforce the injunction was denied on March 28, 2025. However, federal agencies have already taken actions to implement the other provisions of the EO. On January 31, 2025, in accordance with the EO, the U.S. Office of Personnel Management (“OPM”) issued Carrier Letter Number 2025-01A, instructing insurance carriers for federal employees and postal workers (each carrier for federal employees, a “FEHB Carrier”, and each carrier for postal workers, a “PSHB Carrier”) to “‘exclude coverage for pediatric transgender surgeries or hormone treatments’ for the purpose of gender transition” for covered individuals under the age of nineteen for the plan year of 2026. Treatments excluded under this policy include “treatments prescribed for the purpose of delaying the onset or progression of normally timed puberty (including GnRH agonists),” “use of androgen blockers, estrogen, progesterone, and testosterone to align an individual’s physical appearance with an identity that differs from his or her sex,” and “surgical procedures used to align an individual’s physical appearance with an identity that differs from his or her sex”. The letter does allow coverage for surgeries or hormone treatments that are meant to facilitate gender transition for individuals above the age of nineteen, but it does not require such coverage. Carriers are required to comply with this letter for the plan year of 2026. OPM had previously issued Carrier Letter Number 2023-12 on May 23, 2023, preventing FEHB Carriers and PSHB Carriers and from excluding from coverage “services related to gender affirming care, such as hormone therapy, genital surgeries, breast surgeries, and facial gender affirming surgeries”, which Carrier Letter Number 2025-01A now supersedes.
Most recently, on April 11, 2025, the Centers for Medicare and Medicaid Services (“CMS”) issued a letter to State Medicaid Directors reminding states that the use of federal funds received by the State Medicaid programs as part of its federal financial participation for coverage of “procedures, treatments, or operations for the purpose of rendering an individual permanently incapable of reproducing” is prohibited for those procedures if they are performed on a person under the age of twenty-one (42 C.F.R. § 441.253(a)). The letter also reiterates the requirement that states maintain a drug utilization program that complies with Section 1927 of the Social Security Act (42 U.S.C. § 1396r-8) and implies that CMS will publish additional guidance on drug utilization program requirements regarding the prescription of drugs for gender-affirming care treatments, but does not currently implement any changes to the existing requirements. As support for its position, the letter cites studies on the prevalence of gender affirming treatment and to a review conducted in the United Kingdom that found poor quality of studies on gender dysphoria and a lack of reliable evidence to inform gender-based clinical decisions. CMS had previously issued a Quality & Safety Special Alert Memo on March 5, 2025, citing to the same studies as the April 11th letter on the denoted dangers and harmful effects of gender-affirming treatments.
HHS also recently agreed to drop its Biden-era appeal seeking to overturn a judicial order which prevented HHS from enforcing anti-discrimination provisions of the Affordable Care Act (the “ACA”) with respect to transgender individuals in Florida. Previously, in 2024, HHS had published a Final Rule with respect to Section 1557 of the ACA to clarify that such Section protected LGBTQ+ individuals by prohibiting entities receiving federal funding, including healthcare providers, from discriminating against transgender individuals. The State of Florida, several Florida government agencies, and the Catholic Medical Association filed suit and were granted an injunction which blocks the imposition of the anti-discrimination provisions in Florida. Under Biden, HHS appealed the injunction. However, at the request of HHS, the Court of Appeals for the Eleventh Circuit dismissed the appeal on April 3, 2025. This follows a similar dismissal in the Court of Appeals for the Fifth Circuit, where HHS dropped its appeal of a nationwide injunction in Tennessee and a Texas- and Montana-specific injunction in Texas. As a result, HHS may not enforce the anti-discrimination provisions in the ACA with respect to transgender individuals and accordingly, entities receiving federal funds, including certain Medicare payments, may face a low risk of enforcement by HHS as a result of denying care or coverage to transgender individuals.
Parallel State Government Actions
While the EO applies only to federal agencies, many states have also moved to reinstitute state-level prohibitions on gender-affirming care. On April 3, 2025, Ohio Attorney General Dave Yost appealed to the Supreme Court of Ohio to overturn a court order which blocks enforcement of a law preventing the use of hormone or puberty blocking treatments for transgender individuals under the age of eighteen, and also requested the Court prohibit any injunctive relief while the appeal is pending. The law had previously been passed over Governor Mike DeWine’s veto in January of 2024. If successful, doctors in Ohio would be prohibited from providing gender affirming hormone or puberty blocking treatments for transgender individuals under the age of eighteen.
In total since 2021 and as of March 19, 2025, twenty-seven states have passed bans on gender-affirming healthcare: Idaho, Utah, Montana, Wyoming, North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, Texas, Iowa, Missouri, Arkansas, Louisiana, Kentucky, Tennessee, Mississippi, Indiana, West Virginia, South Carolina, Alabama, Ohio, North Carolina, Georgia, and Florida have banned gender-affirming care whether through medication and surgical procedures, while Arizona and New Hampshire have only banned gender affirming surgical care (though Governor Katie Hobbs of Arizona issued an executive order allowing transgender state employees to receive insurance coverage for gender-affirming healthcare services). A challenge to Tennessee’s ban on gender-affirming care is currently pending before the U.S. Supreme Court. The United States had originally filed briefs in support of the original plaintiffs in the case arguing that the Tennessee law violated the Equal Protection Clause of the Fourteenth Amendment, but in a letter dated February 7, 2025, the U.S. Department of Justice changed its position to state that it no longer holds the view that the Tennessee law violates the Fourteenth Amendment, but that the case should not be dismissed so that a ruling on the equal protection question will provide guidance to many cases currently pending in the lower courts.
Not all states, however, have enacted similar legislation. The District of Columbia and the following sixteen states have enacted a variety of protections for gender-affirming care, including “shield” laws to protect providers against enforcement actions initiated by other states that impose bans on gender-affirming care and mandatory insurance coverage for gender-affirming care procedures through application of state non-discrimination laws: Washington, Oregon, California, Arizona (though per the above executive order access is limited only to state employees), Colorado, New Mexico, Minnesota, Illinois, Maryland, New York, New Jersey, Connecticut, Vermont, Rhode Island, Massachusetts, and Maine. Additionally, several state attorneys general, including the state attorneys general of California and New York, have sent letters to individual healthcare providers warning them that withholding medical services from transgender individuals on the basis of their gender identity could violate state anti-discrimination laws.
Notably, on April 4, 2025, eleven states filed an amicus curiae brief in support of a lawsuit before the Court of Appeals for the Sixth Circuit seeking to overturn Michigan’s ban on conversion therapy for minors. Michigan state law prohibits treatment intended to change a person’s sexual orientation or gender identification “including but not limited to, efforts to change behavior or gender expression or to reduce or eliminate sexual or romantic attractions or feelings toward an individual of the same gender,” often referred to as conversion therapy. The plaintiffs in the initial lawsuit argued that the ban unconstitutionally prohibited therapists’ freedom of speech. A federal court judge for the Western District of Michigan found that the Michigan law does not intrude on a therapist’s First Amendment right and upheld the prohibition on conversion therapy. The plaintiffs then appealed to the Sixth Circuit. While this case does not directly involve gender-affirming care, all of the states which are party to the amicus curiae brief have implemented bans on gender-affirming care.
As the legal and political landscape continues to evolve, healthcare organizations and healthcare providers that offer gender-affirming care may face significant new legal, regulatory and financial risks, particularly where there is the potential for conflict between federal requirements and state laws. Even in the absence of direct conflict, there are significant differences between the EO’s stated objectives and state law restrictions on gender-affirming care, such as the specified age range to which the laws apply. The potential complexities and consequences resulting from such differences make it imperative that healthcare organizations and healthcare providers pay careful attention to developments relating to restrictions on gender-affirming care and consult legal counsel as necessary.
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Another Legal Challenge to an AI Interviewing Tool
In the latest lawsuit of its kind, the American Civil Liberties Union recently filed a complaint with the Colorado Civil Rights Division and the Equal Employment Opportunity Commission (“EEOC”) alleging an AI interviewing tool discriminated against a deaf and Indigenous employee at Intuit seeking a promotion.
According to the complaint, when the employee applied for a promotion, Intuit used a HireVue video interviewing platform that scored each candidate on their performance. The complaint alleges that some audible portions of HireVue’s platform lacked subtitles, and the employee’s request for human-generated captioning as an accommodation was denied. The employee was rejected for the promotion, and allegedly received AI-generated feedback from HireVue recommending, among other things, that she “practice active listening. The ACLU alleges this evidence shows the applicant’s hearing disability disadvantaged her in the process. The complaint also alleges “upon information and belief” that the interviewing platform had a disparate impact based on race.
The ACLU’s complaint against Intuit is not the first lawsuit to allege that AI interviewing software ran afoul of statutes intended to protect employees or job applicants. In 2023, an applicant for a job with CVS alleged the company’s use of a video interviewing platform that scored applicants on various competencies including “reliability, honesty, and integrity” violated a Massachusetts statute prohibiting employers from subjecting applicants to lie detector tests as a condition of employment. Baker v. CVS Health Corp., 717 F. Supp. 3d 188 (D. Mass. 2024). After the plaintiff survived a motion to dismiss, the parties reached an individual settlement. In recent months, several other plaintiffs have filed lawsuits bringing similar claims under the Massachusetts statute.
As similar AI solutions gain traction among employers, it is possible that lawsuits such as these will continue to proliferate.
Three Environmental Law Takeaways on President Trump Ordering DOJ to Rescind Civil Rights ‘Disparate Impact’ Regulations
On April 22, the Trump Administration issued an Executive Order (EO) directing the US Department of Justice (DOJ) to begin to unwind “disparate impact” regulations that were established under federal civil rights laws. In the environmental context, the EO likely represents the functional end of some Biden Administration environmental justice (EJ) efforts.
While the EO “Restoring Equality of Opportunity and Meritocracy” is mainly targeted at employment law, it explicitly rescinds specific DOJ “Title VI” regulations used in the EJ space. Additionally, citing to “limited enforcement resources of executive departments and agencies [and] the unlawfulness of disparate-impact liability,” federal agencies are directed to “deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability.”
What Is EJ?
Title VI of the Civil Rights Act of 1964 requires that “No person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.”
In the United States, environmental and public health measures often correlate to variables like education, income, and a community’s racial makeup. In the five decades since US Congress began to create comprehensive environmental statutes like the Clean Air Act, Clean Water Act, and Comprehensive Environmental Response, Compensation, and Liability Act, there has been much success in improving environmental conditions in some communities, but not others.
Prior to the inauguration, the US Environmental Protection Agency (EPA) defined “environmental justice” as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation and enforcement of environmental laws, regulations and policies.”
Biden Administration EJ Efforts Relying on Title VI
The Biden Administration’s EJ policy focused on improving environmental conditions in “environmentally overburdened” communities. Two examples:
Early in the Biden Administration, EPA issued a letter outlining preliminary findings that Louisiana regulators’ “actions or inactions have resulted and continue to result in disparate impacts on Black residents” at three Louisiana locations. (For more, see here.) The letter relied on Title VI of the Civil Rights Act of 1964 — the statutory law cited in the EO — and related EPA nondiscrimination regulations which apply to entities receiving federal funding. The letter noted that even though the involved facilities appeared to be operating within permitted limits, further evaluation appeared warranted to ensure there were no adverse impacts in surrounding environmentally overburdened communities. EPA’s investigation was dropped when Louisiana pressed EPA to defend the investigation’s legal basis. A federal district court ultimately enjoined EPA from enforcing disparate impact-based requirements against Louisiana. (See discussion here.)
In Chicago, Illinois, federal regulators issued a civil-rights focused finding related to the relocation of a metal recycling facility from a wealthy, largely white neighborhood, to a poor diverse one. (For more see here.) The finding put at risk approximately $375 million per year in housing funds Chicago received from the federal government. While Chicago originally contested the finding, a settlement was eventually reached under which Chicago agreed to develop a cumulative impact assessment process. (For more see here.) Chicago’s cumulative impacts ordinance has not yet been finalized.
Importantly, the Biden Administration EPA was often cautious in relying too heavily on federal civil rights laws. For instance, EPA tailored EJ efforts to deemphasize race as a criteria determining whether a particular community was overburdened. EPA’s mapping and demographics tool, EJScreen, originally explicitly analyzed the percentage of people of color in an affected area, but EPA later revised it to deemphasize race as a factor driving EJ actions. (See our past discussion here.) Instead of race, the revised tool used factors like income, education, and population density to identify environmentally overburdened areas. Similarly, when EPA released its Cumulative Impacts Addendum in January 2023 to its memorandum on Legal Tools to Advance Environmental Justice, it said that program staff should confer with the agency’s attorneys on “interpretive issues” and “consideration of other legal issues,” who presumably would weigh in on whether any benefits to a particular community were worth potentially programmatic risk to EPA as a whole.
In contrast, the Trump Administration has essentially disavowed the Biden Administration’s approach to EJ. In its March “Greatest Deregulation in History,” EPA announced that it would “terminate” EPA’s EJ arm. (For more, see here.) This built upon prior efforts. Trump’s first-week EOs revoked several Biden-era policies and announced an effort to terminate all EJ and diversity, equity, and inclusion offices and positions. (For more, see here.)
What to Watch
Deprioritizing EJ does not mean no enforcement in “overburdened” communities. While addressing EJ issues per se are not on the Trump Administration’s agenda, at least some efforts to address problems in environmentally overburdened communities will continue. As one example, EPA Administrator Lee Zeldin visited East Palestine, Ohio — an environmentally overburdened community and the site of a recent train derailment and chemical spill — shortly after his confirmation accompanied by the vice president.
Challenges to the EO and state EJ programs may invoke recent US Supreme Court precedent, including the Students for Fair Admissions affirmative action decision. While the federal government deprioritizes EJ as such, many states maintain EJ programs. For example, efforts continue in states as diverse as New York, in which EJ efforts are rooted in recent state statutory changes, and in Louisiana, where they stem from the state constitution. (For more see here.) The EO instructs the Attorney General to determine whether federal law preempts state disparate-impact programs. The Attorney General, or private parties, may file lawsuits against these programs. In such challenges, parties may raise the 2023 Students for Fair Admissions decision (available here), which struck down affirmative action programs at Harvard College and the University of North Carolina on the grounds that these programs violated the Equal Protection Clause of the 14th Amendment. In a concurrence, Justice Neil Gorsuch discussed Title VI and noted that “discrimination” as defined in the statute, “means any disparate treatment amongst individuals on either an individual or aggregate level” and that this “discrimination” is impermissible “without regard to any other reason or motive ….” The Trump Administration may also invoke Students for Fair Admission to defend the EO from possible legal challenge.
Some litigation in this space is wholly separate from regulations addressed in the EO. State zoning laws are often the unseen hand pushing industrial activities to continue to locate in the same communities, which in turn, are environmentally overburdened. Parties other than federal regulators use litigation to address this. This month, inInclusive Louisiana v. St. James Parish, the Fifth Circuit appellate court overturned a district court decision dismissing one such case filed by residents of St. James Parish, Louisiana, seeking a moratorium on further expansion of petrochemical facilities, and thus allowing the litigation to proceed. (See here for case background.)
New Executive Order Aims to End Disparate Impact Liability for Discrimination
On April 23, 2025, President Donald Trump issued an Executive Order titled “Restoring Equality of Opportunity and Meritocracy” (the “Executive Order”) seeking to “eliminate the use of disparate-impact liability in all contexts to the maximum degree possible.”
Disparate impact liability, first recognized under Title VII of the Civil Rights Act of 1964 by the U.S. Supreme Court in Griggs v. Duke Power Co. (1971), provides that a facially neutral policy that is applied without any discriminatory intent can still give rise to a claim of discrimination if it has a disproportionate impact on a protected group.
The Executive Order directs various executive departments and agencies to take the following actions:
All executive departments/agencies are ordered to “deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability”;
The Attorney General is ordered to report “(i) all existing regulations, guidance, rules, or orders that impose disparate-impact liability or similar requirements, and detail agency steps for their amendment or repeal, as appropriate under applicable law; and (ii) other laws or decisions, including at the State level, that impose disparate-impact liability and any appropriate measures to address any constitutional or other legal infirmities” to President Trump;
The Attorney General is ordered to “initiate appropriate action to repeal or amend the implementing regulations for Title VI of the Civil Rights Act of 1964 for all agencies to the extent they contemplate disparate-impact liability”;
The Attorney General and the Chair of the Equal Employment Opportunity Commission (“EEOC”) are directed to “assess all pending investigations, civil suits, or positions taken in ongoing matters under every Federal civil rights law within their respective jurisdictions . . . that rely on a theory of disparate-impact liability, and [] take appropriate action” in accordance with the Executive Order;
All executive agencies are directed to “evaluate existing consent judgments and permanent injunctions that rely on theories of disparate-impact liability and take appropriate action” in accordance with the Executive Order;
The Attorney General is ordered to “determine whether any Federal authorities preempt State laws, regulations, policies, or practices that impose disparate-impact liability based on a federally protected characteristic such as race, sex, or age, or whether such laws, regulations, policies, or practices have constitutional infirmities that warrant Federal action, and [] take appropriate measures”; and
The EEOC Chair and the Attorney General are directed to “jointly formulate and issue guidance or technical assistance to employers regarding appropriate methods to promote equal access to employment regardless of whether an applicant has a college education, where appropriate.”
Key Takeaways
The final scope of this Executive Order is still to be determined. We have previously written about the Trump administration’s efforts to make changes to the country’s antidiscrimination laws. However, these efforts have faced legal challenges, and it is likely that this Executive Order will also face similar challenges given that some of its directives may be in conflict with established precedent. Further, while executive agencies may be restricted from pursuing claims or taking positions based on theories of disparate impact, the Executive Order does not prevent private individuals from pursuing such claims.
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Does Employer Disparate Impact Liability Still Exist? The Latest EO Pushes to Eliminate It
Article
President Donald Trump issued the “Restoring Equality of Opportunity and Meritocracy” executive order (EO) on April 23, 2025. The stated purpose of the EO is “to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible to avoid violating the Constitution, Federal civil rights laws, and basic American ideals.” But the “maximum degree possible” is more limited than the words suggest.
What Is Disparate Impact?
The typical discrimination claim is a disparate treatment claim where an individual allegedly is treated differently than someone else because of their race, sex, or other protected characteristic. A disparate impact theory of discrimination would find discrimination when the application of a neutral policy or practice disproportionately affects a particular group. For example, pre-employment testing may expose an employer to disparate impact liability if the results disproportionately exclude women, individuals with disabilities, or candidates from certain racial or ethnic groups from proceeding to the next stage of hiring. The expressed concern with the disparate impact theory of liability is that employers may feel forced to engage in affirmative action or overcorrect for the impact of a neutral policy and make decisions based on race or sex to avoid the threat of liability.
The EO
The latest EO challenges the legitimacy and constitutionality of the disparate impact theory of liability. The EO requires the following:
1. Revokes the Presidential approvals of the parts of regulations that prohibit disparate impact discrimination under Title VI of the Civil Rights Act of 1964 (Title VI prohibits exclusion from federally funded programs or activities based on race, color, or national origin);
2. Instructs federal agencies to deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability, including under Title VI and Title VII of the Civil Rights Act;
3. Instructs the attorney general to initiate appropriate action to repeal or amend the implementing regulations for Title VI for all agencies to the extent they contemplate disparate-impact liability and also to provide a report on
all existing regulations, guidance, rules, or orders that impose disparate-impact liability or similar requirements, and detail agency steps for their amendment or repeal, as appropriate under applicable law; and
other laws or decisions, including at the State level, that impose disparate-impact liability and any appropriate measures to address any constitutional or other legal infirmities
4. Instructs the Attorney General and the Chair of the Equal Employment Opportunity Commission (EEOC) to assess all pending investigations, civil suits, or positions taken in ongoing matters under every Federal civil rights law within their respective jurisdictions, including Title VII of the Civil Rights Act of 1964, that rely on a theory of disparate-impact liability, and take appropriate action with respect to such matters consistent with the policy of the EO;
5. Instructs the Attorney General, the Secretary of Housing and Urban Development, the Director of the Consumer Financial Protection Bureau, the Chair of the Federal Trade Commission, and the heads of other agencies responsible for enforcement of the Equal Credit Opportunity Act, Title VIII of the Civil Rights Act of 1964 (the Fair Housing Act), or laws prohibiting unfair, deceptive, or abusive acts or practices to evaluate all pending proceedings that rely on theories of disparate-impact liability and take appropriate action with respect to such matters consistent with the policy of the EO;
6. Instructs all agencies to evaluate existing consent judgments and permanent injunctions that rely on theories of disparate-impact liability and take appropriate action with respect to such matters consistent with the policy of the EO; and
7. Instructs the Attorney General, in coordination with other agencies, to determine whether any Federal authorities preempt State laws, regulations, policies, or practices that impose disparate-impact liability based on a federally protected characteristic such as race, sex, or age, or whether such laws, regulations, policies, or practices have constitutional infirmities that warrant Federal action, and shall take appropriate measures consistent with the policy of the EO.
What Does This Mean for Employers?
The EO’s most likely immediate impact will be seen at the federal agency level. Employers who are facing agency action based on a disparate impact theory under Title VII or Title VI may be able to rely on this EO to limit or stop the federal agency (including EEOC and Department of Justice) from continuing enforcement efforts at both the charge and litigation phases based on this theory.
Employers who are subject to current injunctions or consent decrees with a federal agency that require action to correct a claimed disparate impact may be able to reduce or limit those obligations.
Employers facing litigation from private parties may use the arguments that the federal government relies upon to challenge disparate impact claims; but with statutory support in Title VII, it is unlikely that the disparate impact theory of liability disappears without further congressional or U.S. Supreme Court action.
What Should Employers Do to Avoid Litigation?
Despite uncertainty regarding disparate impact theories of liability, employers remain well-served to evaluate their practices, policies, job requirements, and tests to ensure that they are necessary and effective for purposes of making the best employment decisions and to remove any artificial barriers to equal employment opportunity. An example of such a barrier can be a degree requirement that may or may not be necessary for the job at issue. Notably, the EO also instructs the attorney general and the EEOC chair “to jointly formulate and issue guidance or technical assistance to employers regarding appropriate methods to promote equal access to employment regardless of whether an applicant has a college education, where appropriate.” The current administration has made clear that it expects employers to focus on equal employment opportunity. In evaluating practices, employers should make sure opportunities are available to everyone and remove artificial barriers and avoid making a decision based on the race or sex of an individual to even out the results.
EEOC Seeks Elimination of Voluntary Reporting Non-Binary Data in EEO-1
On April 15, 2025, the Equal Employment Opportunity Commission (“EEOC”) submitted a “non-substantive” Information Collection Request (“ICR”) to the Office of Management and Budget (“OMB”) for approval ahead of its 2024 data collection. Among the requested changes, the EEOC seeks OMB approval for the elimination of the option allowing employers to voluntarily report on employees who self-identify as “non-binary.” The EEOC states the request is made to comply with Executive Order 14168, “Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government.”
The change would apply to the Instruction Booklet and not to the data collection template. The EEOC’s proposed revision to the Instruction Booklet’s “Reporting by Sex” section would reduce the section to one sentence, to state:
“The EEO-1 Component 1 data collection provides only binary options (i.e., male or female) for reporting employee counts by sex, job category, and race or ethnicity.”
The EEOC’s 2023 Instruction Booklet previously stated that:
“The EEO-1 Component 1 data collection currently provides only binary options (i.e., male or female) for reporting employee counts by sex, job category, and race or ethnicity. However, employers may voluntarily choose to report employee demographic data for non-binary employees – that is, employees who do not identify as exclusively male or female – by sex (i.e., non-binary), job category and race or ethnicity in the “comments” section of the report(s). Employers that voluntarily choose to report non-binary employees in the “comments” section of the report(s) should not assign such employees to the male or female categories or any other categories (i.e., job category and race or ethnicity) within the report(s).”
The ICR indicates the EEOC intends to collect 2024 EEO-1 data, which had been an open question since the change in Administration earlier this year. Data collection is scheduled to open on Tuesday, May 20, 2025, and the deadline for filing is scheduled for Tuesday, June 24, 2025. Dates are subject to change. Final dates should be published on the EEOC’s website.
Federal Judge Blocks Key DEI Executive Order Provisions
On April 14, 2025, the U.S. District Court for the Northern District of Illinois issued a preliminary injunction preventing the U.S. Department of Labor (“DOL”) from enforcing a certification provision and termination clause included in the executive orders titled Ending Illegal Discrimination and Restoring Merit-Based Opportunity (“EO 14173”) and Ending Radical and Wasteful Government DEI Programs and Preferencing (“EO 14151”).
The ruling prevents the DOL from enforcing the provision in EO 14173 requiring federal contractors and grantees to certify that they do not operate “illegal” DEI programs that violate any federal anti-discrimination laws. The ruling also enjoins the DOL from terminating a federal grant issued to the plaintiff based on language in EO 14151, which requires agencies to terminate all “equity-related” grants.
Background
Plaintiff, Chicago Women in Trades (“CWIT”), provides programming and training to prepare women across the country for jobs in skilled trades such as electric work, plumbing and carpentry. CWIT receives approximately 40% of its annual budget from federal funding and specifically, a Women in Apprenticeship and Nontraditional Occupations (“WANTO”) grant from the DOL Women’s Bureau. On February 26, 2025, CWIT sued President Trump, the DOL, and several other federal agencies and agency heads, claiming the following provisions of EOs 14173 and 14151 violate the First Amendment, Fifth Amendment, constitutional spending powers held by Congress and the separation of powers principle:
The “Certification Provision” (EO 14173 § 3(b)(iv)), which orders each agency to include certifications in every contract or grant award that the contractor or grantee does not operate illegal DEI programs and that compliance with federal anti-discrimination laws is “material to the government’s payment decisions for purposes of” the False Claims Act;
The “Termination Provision” (EO 14151 § 2(b)(i)), which orders each “agency, department, or commission head” to “terminate, to the maximum extent allowed by law, all ‘equity-related’ grants or contracts.”
CWIT sought a declaration that the Certification Provision and Termination Provision are unlawful and unconstitutional, and preliminary and permanent injunctions enjoining the Defendants, other than President Trump, from enforcing those sections of the EOs that are found to be unlawful and unconstitutional.
Court’s Opinion and Reasoning
District Judge Matthew F. Kennelly issued a nationwide injunction enjoining the DOL’s use of the Certification Provision and enjoining the DOL from terminating the WANTO grant based on the Termination Provision in EO 14151.
As to the Certification Provision, the Court found the government’s argument that the certification is permissible because it simply requires the grantee to certify that it is not breaking the law, unavailing. The Court instead found that the language was unclear and left the meaning of illegal DEI programs up “to the grantee’s imagination” by not defining what DEI is or what makes a DEI program “violate Federal anti-discrimination laws.” The Court noted that the Certification Provision applies to all federal grantees and contractors and that there is a critical urgency to protect grantees and contractors from irreparable injury to their free-speech rights.
The ruling therefore held that CWIT is likely to succeed on the merits in showing that the Certification Provision violates First Amendment rights. The Court also found that the nature of the First Amendment right at stake supported a broad preliminary injunction, not only limited to CWIT, as every contract and grant offered by an agency would likely contain the provision. The Court did, however, limit the injunction to the DOL, noting that CWIT had “demonstrated a risk of imminent harm with regards only to DOL,” and “it is hard to see – and CWIT does not suggest – a basis upon which it would seek grants from agencies other than DOL.”
On the issue of the Termination Provision, the Court similarly found that CWIT showed sufficiently imminent injury as CWIT’s grants were directly targeted by the provision. However, the Court found that, unlike the Certification Provision, “there is likely a low risk that other grantees who risk termination or are terminated will not challenge enforcement of this provision against them.” Therefore, the Court declined to extend the injunction and limited its reach to enjoining the DOJ from terminating CWIT’s WANTO grant.
On April 16, 2025, the DOJ filed a Preliminary Injunction Compliance Status Report confirming its compliance with the Court’s preliminary injunction order and attaching an email that was sent to agency heads in the DOJ and other relevant parties including the Court’s order.
Other cases involving challenges to the EOs discussed in this article include: Nat’l Ass’n of Diversity Offs. in Higher Educ. v. Trump, F. Supp. 3d, No. 25 C 333 ABA, 2025 WL 573764 (D. Md. Feb. 21, 2025); Nat’l Urban League v. Trump, No. 25 C 471 (D.D.C.); and S.F. AIDS Found. v. Trump, No. 25 C 1824 (N.D. Cal.). Other Proskauer articles on this topic include: Federal Court Issues Partial Preliminary Injunction Halting Enforcement of DEI-Related EOs, Fourth Circuit Temporarily Allows DEI-Related EOs to Continue, EEOC and DOJ Release Guidance on DEI and Workplace Discrimination, President Trump Issues Sweeping Executive Orders Aimed at DEI.
White House Executive Order Eliminates Disparate-Impact Liability Enforcement
On April 23, the White House issued an Executive Order entitled Restoring Equality of Opportunity and Meritocracy, directing federal agencies to “eliminate the use of disparate-impact liability in all contexts to the maximum degree possible.” The Executive Order marks a potential shift in how federal fair lending laws will be enforced across the financial services sector.
Federal agencies have historically used disparate-impact liability to evaluate facially neutral policies that may result in unequal outcomes for protected classes. The Executive Order now instructs agencies to reassess their enforcement strategies and deprioritize claims rooted in disparate impact, including under the Equal Credit Opportunity Act, the Fair Housing Act, and other fair lending statutes.
Specifically, the Executive Order directs the Attorney General to identify and initiate repeal or amendment of regulations, guidance, or rules that impose disparate-impact liability. It also calls on federal agencies, including the CFPB, to review all pending investigations, litigation, and consent orders based on disparate-impact claims. Additionally, the Attorney General must evaluate whether federal law preempts state-level disparate-impact regimes and recommend further action where such state laws may conflict with federal policy.
Putting It Into Practice: The Executive Order reflects a broader policy shift on how discriminatory conduct is litigated. (previously discussed here). The Executive Order will certainly impact federal fair lending and anti-discrimination oversight, particularly in areas where enforcement has traditionally relied on statistical disparities rather than explicit intent. Market participants should also prepare for potential divergence between federal and state priorities in some jurisdictions.