Disparate Impact Theory Target of New Executive Order

The disparate impact theory of discrimination has become the target of the latest Executive Order (EO) from President Donald Trump.

Issued in late April, “Restoring Equality of Opportunity and Meritocracy,” declares a new federal policy “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.”

According to the EO, disparate impact liability 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.”

This has made it difficult (in some cases impossible, the EO said) for employers to use bona fide job-oriented evaluations when recruiting.

“Because of disparate-impact liability, employers cannot act in the best interests of the job applicant, the employer, and the American public,” according to the EO. “Disparate impact liability imperils the effectiveness of civil rights laws by mandating, rather than proscribing, discrimination.”

The EO directs all federal agencies—including the Equal Employment Opportunity Commission (EEOC) and Department of Justice—to deprioritize enforcement of all statutes and regulations to the extent they include disparate impact liability.

In addition, the Attorney General (AG) was directed to initiate actions to repeal or amend the implementation of Title VI regulations for all agencies, to the extent they contemplate disparate impact liability, and coordinate with the other agencies to report all existing regulations, guidance, rules or orders that impose disparate impact liability (with steps for their amendment or repeal) and other laws or decisions—including those at the state level—that impose disparate impact liability.

The order requires pending proceedings, consent judgments and permanent injunctions that rely on theories of disparate impact liability to be evaluated, with action taken consistent with the policy of the EO.

The AG was also tasked with determining whether any federal authorities preempt state laws, regulations, policies or practices that impose disparate impact liability such that federal action is warranted.

Finally, the chair of the EEOC and the AG were 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.

To read the Executive Order, click .

Why it matters: The new EO takes a hard line on the disparate impact theory and signals a major change in enforcement. For employers, the EO could mean a decrease in investigations or enforcement actions, but may not signal a change in private litigation, as the theory was established by the U.S. Supreme Court in 1971’s Griggs v. Duke Power, which remains in effect.