EEOC to Cease Investigating Claims of Disparate Impact

We previously reported on an Executive Order issued by President Trump on Wednesday, April 23, 2025,  in which he stated the disparate impact theory has hindered businesses from making hiring and other employment decisions based on merit, skill, and needs. Accordingly, the Executive Order instructs federal agencies to de-prioritize the investigation of such claims.

In an internal agency memo obtained by Bloomberg Law in mid-September, the U.S. Equal Employment Opportunity Commission (EEOC) instructed all staff to end their investigation of any cases in which the claims are based solely on the disparate impact theory by Tuesday, September 30.  Those cases are to be closed and the individuals bringing them are to be issued a 90-day “Right to Sue” notice by the end of October, which notice will allow the individuals to bring their own civil action in federal court.

While the EEOC will cease investigation of charges that only raise claims of disparate impact, if a charge includes a claim of disparate treatment, the charge will remain open, but only the portion raising a disparate treatment claim will be investigated.

This represents a major shift for the EEOC in the enforcement of civil rights laws, as the disparate impact theory has long been used to argue that an employer’s facially neutral policy has a detrimental effect on a protected class of individuals. One example where the disparate impact theory gained prominence was the use of the theory to argue that relying on arrest versus conviction records has a disparate impact on minorities, as they are statistically arrested at a rate higher than their proportion in the general population.  President Trump, however, stated in his April Executive Order that, “A bedrock principle of the United States is that all citizens are treated equally under the law,” and that the disparate impact theory, “not only undermines our national values, but also runs contrary to equal protection under the law and, therefore, violates our Constitution.”

Although the EEOC may no longer be investigating and pursuing disparate impact claims against employers, it is important to keep in mind that individuals can still pursue such claims in federal court after receiving their “Right to Sue” notice. Additionally, many states have codified the disparate impact theory in their anti-discrimination laws, and individuals can bring such claims against employers under applicable state law.

If you have questions about the prior Executive Order, the EEOC’s memo, the disparate impact theory, or a general labor or employment question, feel free to contact Joel R. Hlavaty or any member of Frantz Ward’s Labor & Employment Group.