Federal Government to Drop Disparate Impact Basis for Discrimination Claims

In an extremely important development, on April 23, 2025, President Trump issued an executive order declaring:  “It is the policy of the United States to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible.”  This theory of liability sprung from a 1971 ruling of the U.S. Supreme Court in Griggs v. Duke Power Co. ruling individuals could sue for discrimination even over neutral employment policies that adversely impacted protected groups disproportionately.  Acting EEOC Chair Andrea Lucas immediately pointed out that the EEOC would fully comply with the order and clarified the use of different bias theories.  Thus, she stated that the EEOC would “continue to relentlessly combat unlawful patterns or practices of intentional discrimination in violation of Title VII . . . .”  The legal basis for intentional discrimination claims is known as disparate treatment and has been the most commonly used theory of discrimination over the years.  The most common way to prove disparate treatment is to show that a member of a sexual or racial group is treated less favorably than another group, based on the protected characteristic.  An employment action may be illegal under the disparate treatment approach if “motivated - in whole or in part” by the protected characteristics of race, sex, national origin, etc.  

According to The Economist magazine, the concept that discrimination could occur without deliberate intent was revolutionary.  The EEOC promulgated a “four-fifths” rule, saying that procedures resulting in “a selection rate for any race, sex, or ethnic group” less than the 80% of the highest-performing group would be regarded as “adverse impact.”  The disparate impact concept even carried on into other areas, such as where President Obama pushed schools to remake their discipline policies because Black pupils were suspended and expelled at greater rates that White pupils.  Although disparate impact is written into the law in some areas and the Supreme Court opinion in Griggs remains in effect, a new Supreme Court case might strike down the whole concept as unconstitutional.  Justice Scalia noted in an opinion a number of years ago that ducking this Constitutional question “merely postpones the evil day on which the Court will have to confront the question:  Whether, or to what extent, are the disparate-impact provisions of Title VII of the Civil Rights Act of 1964 consistent with the Constitution’s guarantee of equal protection?”

The most common examples of unintentional discrimination, as opposed to disparate treatment discrimination, occur with employment criteria such as artificial intelligence decision making, personality tests, specific educational requirements, and other such criteria that have the effect of disproportionately excluding protected groups.  

While the adverse impact type of discrimination liability may no longer be enforced by the federal government, the executive order does not eliminate the right for private actions to be brought to enforce the disparate impact theory of liability under the federal discrimination laws.  Also, certain questions are raised in terms of state or local government laws, as the executive order also calls for a review to determine whether the federal government can pre-empt state laws or regulations that “impose disparate impact liability based on federally protected characteristics such as race, sex, or age.”

Editor’s Note:  Although the federal government will no longer be enforcing disparate impact discrimination liability theories, employers face the same obligations as before, including disparate impact liability, in private litigation not brought by the government.

This article is part of our June 2025 Newsletter. 

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