On April 23, 2025, President Trump issued Executive Order (EO) 14281, Restoring Equality of Opportunity and Meritocracy, which seeks 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.” Before we delve into the details of the EO, let’s review the history and application of disparate impact liability in the labor and employment context.
Background on Disparate Impact Claims
Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating against employees and applicants on the basis of race, color, religion, sex, or national origin. There are two main types of claims that may be brought under Title VII: (1) disparate treatment, which is based on discriminatory conduct; and (2) disparate impact, which is based on a neutral policy or practice that disproportionately impacts a particular group regardless of intent. Two landmark Supreme Court cases – Griggs v. Duke Power Co. and Ricci v. DeStefano – further illustrate how the disparate impact doctrine is applied:
- Griggs v. Duke Power Co., 401 U.S. 424 (1971): In the case that established the concept of “disparate impact,” the Court found that a company’s facially neutral policy of requiring a high school diploma and minimum aptitude test scores violated Title VII because the requirements had a disproportionate impact on Black employees and were not a reasonable measure of job performance.
Writing for the majority, Chief Justice Burger declared that the “touchstone” for disparate impact liability is a lack of “business necessity.” Accordingly, “[i]f an employment practice which operates to exclude [a specific demographic group] cannot be shown to be related to job performance, the practice is prohibited.” This theory of liability was codified twenty years after the Griggs decision. See 42 U. S. C. §2000e–2(k)(1)(A)(i).
- Ricci v. DeStefano, 557 U.S. 557 (2009): The Court held that the City of New Haven’s decision to discard the results of a promotional exam – which would have resulted in more white firefighters being promoted – violated Title VII’s prohibition against disparate treatment. Writing for the majority, Justice Kennedy stated that this case presented the question of “whether the purpose to avoid disparate-impact liability excuses what otherwise would be prohibited disparate-treatment discrimination.”
Noting that Title VII explicitly prohibits both disparate treatment and disparate impact discrimination, the Court stated that “race-based action like the City’s in this case is impermissible under Title VII unless the employer can demonstrate a strong basis in evidence that, had it not taken the action, it would have been liable under the disparate-impact statute.” The Court declared that “[a]pplying the strong-basis-in-evidence standard to Title VII gives effect to both the disparate-treatment and disparate-impact provisions, allowing violations of one in the name of compliance with the other only in certain, narrow circumstances.”
Executive Order 14281
The EO challenges the legitimacy of the disparate impact theory of liability, reflecting the administration’s enforcement priorities with respect to civil rights laws – and, notably, conservative think tank Heritage Foundation’s Project 2025 policy suggestions to eliminate the validity of disparate impact liability under Title VII and other laws. Among other things, the EO:
- Revokes prior presidential actions “that approved of disparate-impact liability”;
- Directs federal agencies to “deprioritize enforcement of statutes and regulations that include disparate-impact liability”;
- Instructs the Attorney General to “repeal or amend all Title VII (racial nondiscrimination) regulations that contemplate disparate-impact liability”; and
- Directs the administration to “assess all pending investigations, lawsuits, and consent judgments that rely on a theory of disparate-impact liability, and take appropriate action.”
Former EEOC and DOL Officials Rebuke Executive Order 14281
On May 13, 2025, a group of former U.S. Equal Employment Opportunity Commission and U.S. Department of Labor officials penned a letter stating that the EO is contrary to Title VII and will undermine meritocracy and equal employment opportunity. Among other things, the letter:
- Reaffirms that disparate impact liability is essential to advance merit-based employment because it addresses facially neutral practices that “operate to systematically exclude qualified workers . . . based on protected characteristics for reasons that are not job-related.”
- Criticizes the EO’s assertion “that disparate impact liability results in employers using race-based preferences[,]” and clarifies that disparate impact analysis neither requires nor permits employers to establish a preference based on a protected characteristic;
- Emphasizes that unjustified differences resulting from neutral policies means that individuals of different races or sexes are not being given an equal opportunity to succeed; and
- Notes that the EO’s directives endanger the consideration of disparate impact liability where it is authorized under state law or approved by court order.
To comply with civil rights laws (and avoid liability for discrimination), the former officials advise employers to continue adhering to the statutory requirements of Title VII, and to continue monitoring their practices for potential disparate impact and take corrective action as needed.
Employer Takeaways
Employers should be mindful that disparate impact liability remains codified under Title VII, and existing statutes and case law will continue to govern anti-discrimination laws. While the EO directs federal agencies to eliminate the use and enforcement of disparate impact liability, it does not bar private parties from bringing such claims. Accordingly, employers should take the following steps to mitigate liability and ensure compliance with applicable laws:
- Evaluate job-related requirements to ensure they are relevant and necessary to the performance of job duties;
- Conduct a disparate impact analysis of hiring and performance development policies and practices to identify and remove artificial barriers to equal employment opportunities;
- Avoid making employment-related decisions based on any protected characteristics; and
- Continue complying with federal, state, and local anti-discrimination laws.
In light of the EO’s directive for federal agencies to assess all pending investigations, lawsuits, and consent judgments relying on a disparate impact theory, employers who are facing agency action based on the theory may wish to affirmatively seek a dismissal of enforcement efforts or a narrowing of obligations under current injunctions or consent decrees.
If you have any questions related to EO14281 or need assistance reviewing job-related policies or practices, please reach out to the NFC Attorney with whom you typically work or call us at 973.665.9100 or 619.292.0515.
