On April 23, 2025, President Trump signed an Executive Order (EO) titled Restoring Equality of Opportunity and Meritocracy, which follows a string of prior EOs aimed at removing DEI programs, which we covered here and here. This most recent EO seeks to eliminate the use of disparate-impact liability across federal agencies, marking a significant shift in how civil rights statutes, including Title VII of the Civil Rights Act of 1964, could be enforced.
“Disparate-impact” is a foundational legal concept under both Titles VI and VII of the Civil Rights Act of 1964. The former prohibits discrimination based on race, color, and national origin in federally funded programs, while the latter prohibits discrimination based on race, color, religion, sex, and national origin in employment. Disparate-impact liability has long been used by federal agencies, like the Equal Employment Opportunity Commission (EEOC), and courts to identify policies that, while neutral on their face, result in disproportionately adverse outcomes for protected groups. In the recent EO, President Trump states his view that this legal concept is “contrary to equal protection under the law,” directs the Attorney General to “initiate appropriate action to repeal or amend the implementing regulations for Title VI of the Civil Rights Act of 1964 for all agencies to the extent they contemplate disparate-impact liability,” and orders all agencies, such as the EEOC, to “deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability.”
The latter direction seemingly instructs all federal agencies to reassess and potentially abandon pending investigations and enforcement actions premised on disparate-impact claims, thus reducing the federal government’s role in challenging neutral employment policies and practices that inadvertently disadvantage minority groups. The types of employment policies most likely to avoid government scrutiny under this EO, even if they result in unintentional racial or gender disparities, include those involving standardized testing, hiring algorithms, criminal background checks, physical fitness tests, and educational requirements.
While limiting the enforcement of statutes and regulations incorporating the disparate impact theory, the EO also instructs the Attorney General and the Chair of the EEOC to “[j]ointly 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,” suggesting a shift toward encouraging skills-based hiring rather than requiring traditional credentials like a college degree. This appears aimed at broadening access to employment opportunities, encouraging employers to consider alternative qualifications (e.g., experience, training, certifications), and promoting equal opportunity without relying on affirmative action or disparate-impact considerations.
For employers, this regulatory shift could result in greater flexibility in setting hiring, promotion, and compensation practices and lead to a wider application pool. On the other hand, by removing disparate-impact scrutiny, the mandates of this EO could allow expanded use of hiring and promotion practices reinforcing systemic inequities in some circumstances, whether intentional or not. It certainly calls into question the applicability of decades-long legal precedent relied on daily by employers when managing their employment relationships and assessing potential liabilities.
With respect to Title VII, the EO is a directive to federal agencies regarding enforcement of disparate-impact liability, but it does not eliminate the potential for private lawsuits or the authority, for now, of state and local civil rights laws and agencies, although the EO does require the Attorney General to review state laws to determine if they are preempted by federal law. Employers could face a patchwork of legal requirements, where compliance with civil rights law varies significantly across states. This may complicate compliance strategies for multistate employers and create additional tensions between federal deregulatory efforts and state-level enforcement actions.
Similar to other recent EOs, this one is likely to trigger judicial review given it seeks to alter long-standing civil rights statutes, regulations, and judicial precedent without Congressional action. Courts almost certainly will be asked to determine whether federal agencies can unilaterally abandon the application of disparate-impact liability without violating statutory obligations, especially with respect to Title VII, which contains language specifically incorporating a disparate-impact theory. States may also challenge the federal government’s ability to review their civil rights statutes on preemption grounds. In the meantime, employers should consult legal counsel to assess the risks and responsibilities that persist in light of this shift—and determine how best to navigate an evolving and potentially more fragmented employment law landscape.