A Directive to Dismantle Disparate Impact Litigation
May 7, 2025 – Consistent with the current administration’s rollback of diversity-based initiatives in both public and private enterprise, President Trump issued the “Restoring Equality of Opportunity and Meritocracy” Executive Order (“EO”) on April 23, 2025. The EO is intended to eliminate the use of the “disparate impact” theory of liability, which stems from a neutral policy or practice that has a disproportionately negative effect on a particular protected class, such as one based on race, sex, etc. The EO finds that such litigation is “wholly inconsistent with the United States Constitution,” threatens the nation’s commitment to merit and equality of opportunity, and “hinder[s] businesses from making hiring and other employment decisions based on merit and skill, their needs, or the needs of their customers.” The EO directs all agencies to deprioritize enforcement of all statutes and regulations based on assertions of disparate impact liability, specifically Titles VI and VII of the Civil Rights Act. Private lawsuits based on disparate impact theory remain viable, as does the authority of state and local civil rights laws and agencies (at least for now).
The EO also revokes Presidential approval of certain regulations regarding Title VI, which prohibits discrimination related to receipt of federal financial assistance. In particular, the Attorney General has been directed to initiate appropriate action to repeal or amend Title VI’s implementing regulations for all agencies to the extent they contemplate disparate impact liability. Within 30 days of the EO’s entry, the Attorney General must report to the President (i) all existing regulations, guidance, rules, or orders imposing disparate impact liability or similar requirements, and detail agency steps for their amendment or repeal (as appropriate under applicable law); and (ii) other laws or decisions (notably including those at the State level) imposing disparate-impact liability and any appropriate measures to “address any constitutional or other legal infirmities.”
Within 45 days of the EO’s entry, numerous agency heads, specifically including the Attorney General and the Chair of the Equal Employment Opportunity Commission (“EEOC”), must assess all pending investigations, civil suits, or positions taken in ongoing matters under every Federal civil rights law within their respective jurisdictions relying on disparate impact theories. “Appropriate action” must then be taken consistent with the EO’s policy of dismantling the pursuit of disparate impact liability. Agencies are similarly directed to evaluate existing consent judgments and permanent injunctions that rely on theories of disparate impact liability within 90 days of the EO’s entry and take appropriate action consistent with the EO’s policy.
The EO extends not only to pending matters involving disparate impact liability, but it requires future agency action, mandating the Attorney General to determine whether any Federal authorities preempt State laws, regulations, policies, or practices imposing disparate impact liability based on federally protected characteristics. The Attorney General must take all “appropriate measures” to cure “constitutional infirmities” warranting federal action.
If you have any questions about this development, or how it might impact your company’s existing policies and procedures, please do not hesitate to contact the Kullman attorney with whom you work.