On July 31, 2026, Illinois Governor JB Pritzker signed the Civil Rights Safeguard Act into law, adding Illinois to a growing list of states that have codified disparate impact liability in response to federal actions deprioritizing enforcement of the theory in discrimination investigations. The Civil Rights Safeguard Act amends the Illinois Human Rights Act and prohibits employers from using seemingly neutral criteria in employment actions that have the effect of discriminating against applicants or employees, unless they can demonstrate that the criteria are job related and consistent with business necessity, and there is no other employment practice that has a less discriminatory effect.
Disparate impact theory is a legal concept that states that a neutral policy or practice can violate anti-discrimination laws if it disproportionately harms a protected group and is not job-related. Disparate impact liability was first applied as a part of the Supreme Court’s ruling in Griggs v. Duke Power Co. in 1971. In this particular case, Duke Power Co. required a high school diploma and specific scores on two general intelligence tests in order for workers to transfer out of the lowest-paying department. An African American employee sued, claiming that this policy violated Title VII because those requirements were not related to the job, and had the impact of discriminating against African American applicants. The Supreme Court ruled that if job requirements have a disproportionate effect on a protected group and cannot be shown to be related to job performance, Title VII may be violated.
In 1991, Congress amended Title VII to codify disparate impact and describe the burden of proof process that applies in disparate impact cases. First, a plaintiff must identify the specific practice or policy that is causing the adverse effect on the protected group. They must then show that the policy or practice is causing a statistically significant difference in outcomes between protected and non-protected groups. The burden then shifts to the employer to demonstrate that the policy or practice in question is job-related and consistent with business necessity. However, a Title VII violation could still be found if the plaintiff can prove that there is an alternative employment practice that serves the employer’s legitimate goals and that the employer refused to adopt it.
Recent changes at the federal level have resulted in some states codifying disparate impact theory in their state laws. In April 2025, the Trump administration released Executive Order 14281 (‘Restoring Equality of Opportunity and Meritocracy’) which declared the administration’s goal of eliminating disparate impact liability wherever possible. It called on federal agencies to deprioritize disparate impact enforcement and revoked the Presidential approval of the Department of Justice’s (DOJ) regulations under Title VI of the Civil Rights Act of 1964, which prohibited recipients of federal funding from using methods that created an unintentional disparate impact on a protected group.
Earlier this year, U.S. Equal Employment Opportunity Commission (EEOC) Chair Andrea Lucas requested an opinion from the DOJ related to disparate impact as a part of EEOC’s implementation of EO 14281, and the DOJ responded with a letter from the agency’s Office of Legal Counsel. This letter stated that the EEOC’s previous guidelines on disparate impact under Title VII put too much focus on statistical disparities in outcomes by protected groups, and not enough focus on the intent behind the actions. The DOJ argued that the EEOC’s guidelines could have the result of employers making employment decisions based on a protected class and is inconsistent with how Title VII should be interpreted. The DOJ letter stated that employers can justify using tools that have a statistically significant impact on protected groups if they can show that the practice is “rational, convenient, or helpful for serving a valid business purpose”. In June 2026, the EEOC released its National Enforcement Plan which details the agency’s priorities from fiscal year 2025 through fiscal year 2029. In this plan, the agency notes that it will prioritize disparate treatment cases and will eliminate the use of disparate impact theories in cases “to the maximum degree possible”.
While the Executive Order, DOJ memo, and EEOC National Enforcement Plan do not change Title VII law, some states are taking matters into their own hands and codifying disparate impact liability at the state level. In addition to Illinois, in October 2025 California amended their Fair Housing and Employment Act (FEHA) regulations to clarify how the FEHA applies to the use of artificial intelligence in employment. As a part of this, the state clarified that the use of facially neutral artificial intelligence (AI)-based selection tools that have an adverse impact on employees or applicants based on a protected characteristic are prohibited, unless the employer can show that the practice is “job-related and consistent with business necessity”. The FEHA regulations also state that employers can defend against a discrimination claim, including disparate impact, if they can show they performed anti-bias testing as a proactive effort to avoid unlawful discrimination.
New York and New Jersey quickly followed, amending their state non-discrimination laws to clearly codify disparate impact liability. However, New Jersey took it a step further by incorporating the Uniform Guidelines on Employee Selection Procedures, which require employers to justify their practices as being job-related with specific evidence. States like Minnesota, Massachusetts, and Colorado already recognize disparate impact liability under their employment anti-discrimination laws, and other states are in the process of implementing new or clarifying regulations.
This disconnect between federal enforcement priorities and an evolving patchwork of state laws creates a challenge for employers, particularly those who operate in multiple states. Employers should not assume that disparate impact liability is a thing of the past, just because the federal government has deprioritized enforcing this portion of the law. Disparate impact discrimination cases can be brought by individual plaintiffs under Title VII, and under a growing number of state non-discrimination laws.
Employers should also audit their selection processes for all employment decisions – recruitment, hiring, promotions, and terminations. This audit should include any AI-based tools, or those that use algorithms to affect how applicants or employees are selected for employment decisions. Whether an employment process includes AI or not, employers should be ready to prove that any selection procedures or criteria in place are job-related and consistent with business necessity. A robust and consistent self-auditing process is employers’ best defense against potential disparate impact claims, under both federal law and the growing number of state laws that specifically carve out liability for employment practices that cause a disparate impact on a protected basis.