Trump Attempts to Eliminate Disparate Impact Theory via Recent Executive Order
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. An often cited example is the use of an arrest to reject an applicant for employment, which the EEOC and plaintiffs have argued has a disparate impact on minorities who statistically are arrested at a rate higher than their proportion in the general population.
On April 23, 2025, President Trump issued an Executive Order (“EO”) titled, “Restoring Equality of Opportunity and Meritocracy.” In the EO, the President reiterates sentiments present in earlier EOs, namely that, “A bedrock principle of the United States is that all citizens are treated equally under the law,” and goes on to state:
But a pernicious movement endangers this foundational principle…A key tool of this movement is disparate-impact liability, which holds that a near insurmountable presumption of unlawful discrimination exists where there are any differences in outcomes in certain circumstances among different races, sexes, or similar groups, even if there is no facially discriminatory policy or practice or discriminatory intent involved, and even if everyone has an equal opportunity to succeed…It not only undermines our national values, but also runs contrary to equal protection under the law and, therefore, violates our Constitution.
The EO further proclaims that the disparate impact theory has hindered businesses from making hiring and other employment decisions based on merit, skill, and needs and prevents employers from acting in the best interests of the job applicant, the business, and “the American public.” Accordingly, among other things, the EO orders, “all agencies…[to] deprioritize enforcement of all statutes and regulations to the extent they include disparate impact liability.”
The disparate impact theory is far from being removed from the EEOC’s arsenal and that of plaintiff’s attorneys and likely may require a decision from the U.S. Supreme Court, if not congressional action, to be eliminated. However, the EO provides an argument for employers in an attempt to reduce, limit, or even prevent actions by the EEOC when it is pursuing a disparate impact theory of liability and provides an argument, and potentially a defense, in civil actions.
If you have questions about this EO, the disparate impact theory, or a general labor or employment question, contact Joel R. Hlavaty or any member of Frantz Ward’s Labor & Employment Group.
