Trump Executive Order Seeks to Eliminate Disparate-Impact Liability

On April 23, 2025, President Donald Trump issued an Executive Order entitled “Restoring Equality of Opportunity and Meritocracy.” The Order announces the Administration’s intent to “seek 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.” The Executive Order directs all federal agencies to “deprioritize” enforcement of statutes and regulations that include disparate-impact liability, instructs all federal agencies to consider ways to repeal or amend regulations that impose disparate-impact liability under Title VII of the Civil Rights Act, and directs the federal government to assess all pending investigations, lawsuits and consent judgments that rely on a disparate-impact theory of liability and take appropriate action.

The Executive Order marks a notable shift in the federal government’s enforcement priorities and efforts with respect to discrimination under the Trump Administration, which will not focus on disparate-impact theories. However, it is unclear how much of an impact, if any, the Executive Order will have on private litigation given that many federal, state and local statutes continue to include disparate-impact liability and that long-standing judicial precedent recognizes disparate-impact as a theory of liability under certain civil rights laws.

Understanding Disparate-Impact Liability

Disparate-impact liability refers to a theory of discrimination in which a facially neutral policy or practice is held to be unlawfully discriminatory because it has a disproportionately negative impact on members of a protected class, subject to certain defenses, such as a showing that the policy or practice is job-related and based on a legitimate “business necessity”. Under this theory, employers, housing providers, lenders, governmental entities, and other actors may be held liable for policies or practices that have discriminatory consequences in practice, even if there is no proof of an intent to discriminate.

The US Supreme Court first recognized disparate-impact liability under Title VII of the Civil Rights Act of 1964 in Griggs v. Duke Power Co.¹ In Griggs, the Supreme Court held that an employer’s practice of requiring prospective employees to pass an arbitrary “intelligence” test—which was neutrally applied, but had no connection to the applicant’s ability to perform the job duties—violated Title VII because it disproportionately disqualified non-white applicants.² Following Griggs, Congress amended Title VII in the Civil Rights Act of 1991 to add Section 703(k), which acknowledged that discrimination could be based on “an unlawful employment practice based on disparate impact.” In addition, disparate-impact liability has been incorporated in a multitude of other federal anti-discrimination statutes, including the Age Discrimination in Employment Act (ADEA), the Fair Housing Act (FHA), and the Americans with Disabilities Act (ADA). Several state anti-discrimination laws similarly permit discrimination claims based on disparate impact liability, either as explicitly codified by statute or based on case law applying state law, such as theCalifornia Fair Employment and Housing Act(Cal. Gov. Code § 12900 et seq.), Washington Law Against Discrimination (Wash. Rev. Code § 49.60.010 et seq.), and Delaware Fair Housing Act (Del. Code tit. 6, § 4603).

Policy Against Disparate-Impact Liability Articulated By the Executive Order

President Trump’s Executive Order asserts that disparate-impact liability “is wholly inconsistent with the Constitution” and “imperils the effectiveness of civil rights laws by mandating, rather than proscribing, discrimination.” The Order explains that the “bedrock principle” of the United States that all citizens are treated equally under the law guarantees “equality of opportunity, not equal outcomes.” According to the Executive Order, disparate-impact liability imposes 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 characterizes disparate-impact liability as “all but requir[ing] individuals and businesses to consider race and engage in racial balancing to avoid potentially crippling legal liability,” and concludes that it “has hindered businesses from making hiring and other employment decisions based on merit and skill, their needs, or the needs of their customers because of the specter that such a process might lead to disparate outcomes, and thus disparate-impact lawsuits.”

The White House issued a “Fact Sheet” summarizing the Order, titled “Fact Sheet: President Donald J. Trump Signs Landmark Order to Restore Equality of Opportunity and Meritocracy.” The Fact Sheet explains that the purpose of the Order is to “restore[] the true promise of the Civil Rights Movement—a system that does not differentiate between Americans based on race and where success is determined by individual merit, free from discriminatory practices that prioritize group outcomes over personal achievement.”

Revocation of Presidential Approvals of Title VI Regulations

Under Title VI of the Civil Rights Act, federal departments and agencies that award federal funding to any program or activity through grants, loans or contracts are permitted to issue rules, regulations or orders to effectuate the anti-discrimination provisions of Title VI, provided such rules, regulations or orders are approved by the President. 42 U.S.C. § 2000d-1. Section 3 of the Executive Order revokes Presidential approval of a number of such regulations under Title VI:

• 8 C.F.R. 42.104(b)(2)–(3): Prohibiting a recipient of federal funding from utilizing “criteria or methods of administration which have the effect of subjecting individuals to discrimination,” or from selecting “the site or location of facilities” if doing so has the “purpose or effect of excluding individuals from” programs receiving federal funding.
• 28 C.F.R. 42.104(b)(6)(ii): Allowing a recipient of federal funding to take affirmative action in administering the program to “overcome the effects of conditions which resulted in limiting participation by persons of a particular race, color, or national origin.”
• 28 C.F.R. 42.104(c)(2): Requiring recipients of federal funds to “assure equality of opportunity” in employment practices if “discrimination on the ground of race, color, or national origin in such employment practices tends . . . to exclude persons from participation in, to deny them the benefits of, or to subject them to discrimination” under the program receiving federal funds.

Deprioritization of Disparate-Impact Laws and Regulations

The Executive Order instructs federal agencies to “deprioritize” enforcement of all anti-discrimination statutes or regulations to the extent they include disparate-impact liability, and specifically references:

• The disparate liability provisions of Title VII of the Civil Rights Act of 1964 (prohibiting employment discrimination) (42 U.S.C. § 2000e-2).
• The above-referenced provisions in the implementing regulations of Title VI that apply to recipients of federal funds: 8 C.F.R. 42.104(b)(2)–(3), 28 C.F.R. 42.104(b)(6)(ii), and 28 C.F.R. 42.104(c)(2).

Review of Pending Matters and Judgments

The Executive Order includes a number of directives to various federal agencies requiring them to review pending investigations, matters and judgments and “take appropriate action” consistent with the policy of the Executive Order with respect thereto—suggesting that existing federal enforcement actions utilizing disparate-impact frameworks will be discontinued. Specifically, the Executive Order provides:

• Within 45 days (i.e., by June 7, 2025), the US Attorney General and the Chair of the Equal Employment Opportunity Commission (EEOC) must “assess all pending investigations, civil suits, or positions taken in ongoing matters under every Federal civil rights law within their respective jurisdiction, including Title VII of the Civil Rights Act of 1964, that rely on a theory of disparate-impact liability” and “take appropriate action” consistent with the policy in the Executive Order.
• Within 45 days (i.e., by June 7, 2025), the heads of various other federal agencies, including the Secretary of Housing and Urban Development, the Chair of the Federal Trade Commission and the Director of the Consumer Financial Protection Bureau, who are responsible for enforcing the Equal Credit Opportunity Act, the Fair Housing Act, and other “laws prohibiting unfair, deceptive, or abusive acts or practices,” must “evaluate all pending proceedings that rely on theories of disparate-impact liability and take appropriate action” consistent with the policy of the Executive Order.
• Within 90 days (i.e., by June 22, 2025), all federal agencies must 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 Executive Order.

Repeal and Amend Federal Regulations and Evaluate Potential Preemption Challenges to State Law

Along the same lines, the Executive Order directs the US Attorney General to initiate action to either repeal or amend the implementing regulations for Title VI to the extent they contemplate disparate-impact liability and, within 30 days (by May 23, 2025), to report to the President:

• All existing “regulations, guidance, rules, or orders” that impose disparate-impact liability “or similar requirements,” and identify the steps agencies must take to amend or repeal them.
• Other laws or decisions, including state laws, that impose disparate-impact liability and “any appropriate measures to address any constitutional or other legal infirmities.”

Finally, the Executive Order calls for the US Attorney General, in coordination with other federal agencies, to determine whether any federal authorities preempt state laws, regulations, policies, or practices that impose disparate-impact liability based on 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 shall take appropriate measures consistent with the policy of this order.” It also directs the Attorney General and the EEOC to formulate and issue guidance to employers regarding “appropriate methods to promote equal access to employment regardless of whether an applicant has a college education.” Thus, in coming months, employers should expect to see federal guidance regarding hiring decisions that are based on the applicant’s college education (or lack thereof).

Implications for Employers

The Executive Order reflects the federal government’s ongoing shift in enforcement priorities with respect to the civil rights laws. Within the next few months, federal agencies will likely dismiss, close or narrow pending enforcement actions, litigation, investigations, and consent decrees in matters based on disparate-impact theories of liability. As a result, companies that are subject to such actions, investigations or orders may wish to affirmatively seek such a dismissal or narrowing.

In addition, federal agencies will likely amend or remove guidance and regulations to the extent they implicate disparate-impact liability. For example, as of April 24, the EEOC’s technical assistance document, titled “Assessing Adverse Impact in Software, Algorithms, and Artificial Intelligence Used in Employment Selection Procedures Under Title VII of the Civil Rights Act of 1964“ (issued on May 18, 2023), has been removed from the EEOC’s website. The removal of such guidance changes the landscape, as the use of artificial intelligence (AI) in the workplace was identified as a focal point of regulatory scrutiny under the Biden Administration, and use of AI is only increasing.

At the same time, it is unclear how much impact the Order will have on discrimination claims from private plaintiffs, as disparate-impact liability remains codified in Title VII and certain other state and local statutes, and individuals are free to bring private lawsuits against their employers without regard to the position of government agencies. Disparate-impact liability has also been upheld by courts for decades as a legitimate theory for establishing discrimination under certain federal, state and local anti-discrimination laws—and the Executive Order does not alter those precedents.

Mayer Brown will continue to monitor developments in this area, and is available to advise employers on the practical implications of this Executive Order and related agency actions.

¹ 401 U.S. 424 (1971).

² Id.