New Executive Order Indicates Trump Administration Will De-Emphasize Disparate Impact Enforcement

On April 23, 2025, the White House issued Executive Order 14281 entitled “Restoring Equality of Opportunity and Meritocracy” that announces the Administration’s 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.”

Several federal civil rights statutes broadly prohibit both disparate treatment and disparate impact based on a protected characteristic, such as race or sex. Disparate treatment theory prohibits employers from intentionally treating individuals within a protected class differently than similarly situated individuals outside that class. On the other hand, disparate impact theory prohibits the use of a neutral policy, practice or procedure that has a negative impact based on a protected trait.

What does EO 14281 do?

The new EO mainly addresses Title VI of the Civil Rights Act of 1964 which prohibits discrimination in federally assisted programs. EO 14281 immediately revokes previous “Presidential approvals” of disparate impact liability under Section 602 of the Civil Rights Act (codified at 42 U.S.C. § 2000d). Section 602 states that, “No person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.” The new EO also directs the Attorney General to “repeal or amend” all Title VI regulations that implicate disparate impact liability.

However, EO 14281 also takes a broader aim at disparate impact liability. According to a Fact Sheet issued by the Administration, all agencies should “deprioritize” enforcement of statutes and regulations imposing disparate impact liability. This includes Equal Employment Opportunity Commission (EEOC) enforcement of disparate impact claims under Title VII of the Civil Rights Act, which prohibits discrimination by private employers. Section 6 of the EO also directs that the Attorney General and the Chair of the EEOC “assess” pending investigations, civil suits, positions taken in ongoing matters, consent judgments and permanent injunctions under “every Federal civil rights law” and “take appropriate action with respect to such matters consistent with the policy of this order.”

Additionally, EO 14281 directs the Administration to review state laws that impose disparate impact liability. Section 3 instructs the Attorney General to report back to the President in 30 days regarding “other laws or decisions, including at the State level, that impose disparate-impact liability and any appropriate measures to address any constitutional or other legal infirmities.” Section 7 goes on to direct the Attorney General to “determine whether any Federal authorities preempt State laws, regulations, policies, or practices that impose disparate-impact liability base on a federally protected characteristic…or whether such laws, regulations, policies, or practices have constitutional infirmities that warrant Federal action… .”

What has NOT changed?

EO 14281 does not create new or alter existing laws or regulations for private employers. Disparate impact claims have been recognized under Title VII since the 1971 Supreme Court decision in Griggs v. Duke Power Co. Congress later codified disparate impact liability in the Civil Rights Act of 1991. The new EO does not – and cannot – overrule a Supreme Court decision or change a statute passed by Congress.

Thus, it is important for employers to understand that individual and class disparate impact claims can still be brought under Title VII. We expect that plaintiffs’ attorneys will fill any enforcement gap left under federal law. Similarly, EO 14281 does not change state law on this issue. Employers may see an uptick of state law claims, or even revisions to broaden state anti-discrimination statutes in response to EO 14281. Put simply, disparate impact liability under Title VII (and under many state antidiscrimination laws) remains a real risk for all employers.

When taking steps to manage and mitigate the risk of such claims, employers should keep in mind that disparate impact claims follow a three-step analytical process. Once the plaintiff proves that an employment practice has a discriminatory effect, an employer may demonstrate that the practice is justified because it is job-related and consistent with business necessity. Even then, a plaintiff can still prevail if they demonstrate that there is a less discriminatory, but equally effective, alternative practice. Employers should evaluate the information they need to continue to demonstrate the job-relatedness of their policies and practices. Berkshire has a team of experienced industrial/organizational psychologists who can help employers ensure their employment policies and practices meet this standard.

It also is important to remember that most of the systemic discrimination cases brought by the EEOC have been pattern or practice discrimination cases – not disparate impact cases. Section 707(a) of the Civil Rights Act of 1964 authorizes the EEOC to sue employers engaged in a pattern or practice of discrimination. In International Brotherhood of Teamsters v U.S., the Supreme Court held that the government must show that “unlawful discrimination has been a regular procedure or policy followed by an employer” in such a case.

EEOC’s systemic enforcement webpage provides a long list of the types of practices and policies that may be challenged by the EEOC as a pattern or practice of discrimination, including the following:

• Recruitment practices such as favoring or limited to word-of mouth
• Refusal to hire by race or sex for certain positions as a matter of policy or practice
• Widespread sexual harassment
• Tap-on-the-shoulder promotion policies
• Big data- using algorithm to sort through applications
• Personality or customer service tests; physical ability or capacity tests; cognitive tests
• Layoffs or RIFs

Just like disparate impact claims, many of the pattern and practice cases brought by the EEOC over the years also rely on statistical analyses of workforce data. For example, in the EEOC’s Office of General Counsel Fiscal Year 2024 Annual Report, the Commission highlighted the following pattern or practice cases:

• Claim that a pharmaceutical company’s early career hiring resulted in a pattern or practice of refusing to hire individuals 40 years or older for pharmaceutical sales representatives because of age, resulting in a consent decree providing for $2.4 million dollars to impacted older workers;
• Claim that a staffing agency engaged in pattern or practice of sex discrimination in hiring and job assignments by honoring customers’ preferences for male workers, resulting in a three-year consent decree providing for a payment of $875,000 to a class of over 1000 female applicants;
• Claim that a commercial laundry company and staffing firm engaged in a pattern or practice of sex segregation, resulting in a consent decree requiring the maintenance of applicant tracking information.

The new EO does not appear to change the EEOC’s emphasis on pattern or practice claims. And, in fact, EEOC Acting Chair Andrea Lucas recently requested wide-ranging sex and race data for applicants and employees from 20 major law firms, suggesting that pattern or practice claims may be used by this Administration to evaluate illegal DEI and other unlawful discrimination.

What to do now?

Employers should continue to evaluate their employment practices to ensure compliance with current law. This includes conducting regular audits of employment activity using workforce analytics. Such steps remain critical to evaluating the risk of pattern or practice claims that the government may pursue and disparate impact claims that may be brought by employees or state enforcement agencies.

These analyses will also help federal contractors evaluate whether a company official can certify in good faith under EO 14173. Among other things, EO 14173 directed all federal agencies to include two new clauses in federal contracts:

• A term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of the False Claims Act (FCA); and
• A term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.

FCA liability attaches when a contractor “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval.” 31 U.S. Code § 3729. Knowingly false is defined broadly under the FCA and means actual knowledge, deliberate ignorance or reckless disregard of the truth or falsity of the information being certified. Importantly, the FCA also allows private individuals to file lawsuits on behalf of the government, known as qui tam lawsuits, which further raises the risk of making a false certification. Evaluating and removing EEO barriers through workforce analytics is a well-proven way to ensure compliance with Federal anti-discrimination laws.

Employers also should continue to ensure their employment policies and practices, especially tests, are job-related and consistent with business necessity. While tests can be an effective tool for ensuring merit-based hiring, that is only the case if the test or selection procedure is actually measuring job-related requirements or success – regardless of whether it has adverse impact or not. Therefore, employers who aim to hire the most qualified individuals for their jobs should continue to evaluate whether their use of tests and other selection procedures are appropriate, including by validating those selection procedures with a qualified I/O psychologist.

We expect additional direction from the Department of Justice and the EEOC about how this new EO will change the government’s enforcement activities in the coming weeks. We will continue to monitor changes in this area and encourage employers to subscribe to our blog to stay on top of new developments.