KHVPF Insight
Trump Executive Order Targets Disparate Impact, But What Does It Really Do?
On April 23, 2025, Donald Trump signed Executive Order 14281, titled Restoring Equality of Opportunity and Meritocracy. The EO characterizes disparate impact liability as a national threat and pledges to “eliminate the use of disparate impact liability in all contexts to the maximum degree possible.” But while the language is bold, the actual impact on employers is likely to be limited. Despite its rhetoric, an executive order cannot override statutes or judicial precedent, and disparate impact claims remain very much alive in both federal and state courts.
Disparate Impact: A Refresher. The concept of disparate impact liability dates to the Supreme Court’s 1971 decision in Griggs v. Duke Power Co., 401 U.S. 424 (1971). Congress later codified Griggs in the Civil Rights Act of 1991, and the theory has been applied beyond Title VII to the Americans with Disabilities Act and Age Discrimination in Employment Act. Individual states have also recognized the availability of disparate impact liability under state anti-discrimination laws.
Unlike disparate treatment claims, which involve claims of intentional discrimination because of an employee’s protected characteristics, disparate impact claims focus on whether a seemingly neutral policy or practice has a disproportionate impact on a protected class. A disparate impact claim thus requires proof that a particular policy or practice has a disproportionately harmful effect on a particular class of individuals. This is usually done with statistical analyses and expert testimony. The burden then shifts to the employer to show both that (1) the policy or practice is “job related for the position in question and consistent with business necessity” and (2) there is no other less discriminatory alternative that would achieve the same goal. 42 U.S.C. § 2000e-2(k)(1)(A).
Plaintiffs have used disparate impact theories to challenge criminal background checks, aptitude tests, rating systems, English-only rules, and lifting requirements, among other policies. More recently, plaintiffs have attacked AI hiring tools under disparate impact theories, arguing that the tools disproportionately screen out applicants on the basis of race, ethnicity, or sex.
Executive Order 14281. Trump’s EO directs the EEOC and other federal agencies to roll back the use of disparate impact liability. Among other things, it:
- Directs the Attorney General to identify and propose the repeal or amendment of any existing regulations, guidance, rules or orders that impose disparate impact liability “or similar requirements;”
- Orders the Department of Justice and the EEOC to review pending investigations and cases involving disparate impact theories of liability and to take action consistent with the EO;
- Requires federal agencies to evaluate consent judgments and permanent injunctions that rely on disparate impact theories and take appropriate action consistent with the EO;
- Directs the EEOC and DOJ to issue guidance on promoting access to employment for candidates without a college education; and
- Instructs the Attorney General, in coordination with other federal agencies, to determine whether state disparate impact laws are preempted by federal law or raise constitutional concerns and take action accordingly.
The EO’s Limited Legal Effect. Despite its sweeping tone, it is important to remember what executive orders cannot do: rewrite a statute, overrule judicial precedent, or definitively declare what is or is not constitutional. Notwithstanding the EO, private plaintiffs can still pursue discrimination claims using disparate impact theories under both federal and state laws.
Practically speaking, the EO will primarily affect investigations and litigation by the EEOC and the DOJ, at least until the end of this administration. It is safe to assume that for the next few years, EEOC and DOJ will not pursue new disparate impact investigations or claims. They might also withdraw or amend earlier filings in pending disparate impact litigation or modify recent consent judgments or settlements. There is also a possibility that DOJ will challenge state laws imposing disparate impact liability on preemption or constitutional grounds. But that’s all.
Practical Steps for Employers. Because the EO cannot limit private enforcement, employers should continue to take steps to mitigate the risk of disparate impact claims, including conducting adverse impact analyses of reductions-in-force, thoroughly documenting the business justification for any practices that may have a disparate impact, and carefully vetting any automated hiring tools. Employers who are currently facing a disparate-impact proceeding against a federal agency should also consider how best to leverage this EO to settle or dismiss the proceeding. Finally, given the legal and political scrutiny surrounding disparate impact liability, employers should ideally conduct any disparate impact or adverse impact analyses under the protection of the attorney-client privilege.