Disparate impact is a long-standing theory of liability recognized under laws like Title VII, the Age Discrimination in Employment Act and many state employment laws. First recognized by the United States Supreme Court in 1971 in Griggs v. Duke Power Co., the Supreme Court held that facially neutral employment practices can violate Title VII where they disproportionately exclude protected groups unless the employer can show the practices are job-related and consistent with business necessity. Griggs v. Duke Power Co., 401 U.S. 424, 431–36 (1971). Disparate impact claims are assessed by courts under the burden-shifting framework known as the “effects test,” which requires:

1. Plaintiff must identify a specific practice or policy that is responsible for a discriminatory or adverse effect.
2. The policy or practice must be the cause of the difference, and it must be substantial; a statistical disparity is insufficient; EEOC regulations generally require disparate-impact claims to show that employees of a certain group are selected at a rate that is less than 80 percent of the selection rate for the most selected group.
3. Assuming the above showing is made, the burden shifts to the defendant to confirm that the challenged policy or practice is justified. In employment, it needs to be job-related and consistent with business necessity.
4. Plaintiff can still prevail if he/she proves that a less discriminatory policy would meet the business need.

Not only was disparate impact recognized as a theory of liability by the Supreme Court, but in 1991, Congress amended Title VII, codifying the theory. It remains the law today.

Notwithstanding disparate impact’s currently recognized legal status under Title VII, on April 23, 2025, President Trump issued Executive Order, “Restoring Equality of Opportunity and Meritocracy” targeting disparate impact. President Trump declared that it was “the policy of the United States 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.” The President directed 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.” Further, the Attorney General was also instructed to report to the President regarding “other laws or decisions, including at the State level, that impose disparate-impact liability and any appropriate measures to address any constitutional or other legal infirmities.

We have seen several actions taken by federal administrative agencies in response to this Executive Order. The Attorney General issued a memorandum to all federal agencies on July 29, 2025, regarding how to apply federal antidiscrimination laws, signaling a shift from disparate impact theories of liability. Moreover, on September 23, 2025, an internal EEOC memorandum indicated that the agency would no longer pursue complaints alleging disparate impact, and the EEOC moved to dismiss its pending claims based on disparate impact treatment.

While employers may be seeing a lot in the news about the Trump administration’s opposition to the disparate impact theory of liability, employers need to realize that it remains the law of the land. Although the EEOC and other federal administrative agencies may not pursue or prioritize disparate impact claims, nothing prevents private litigants from pursuing such claims. Nothing about the President’s Executive Order changes the fact that disparate impact is a theory of liability codified in law (for Title VII), recognized by case law (for claims under the ADEA and some other statutes), and, in some cases, is recognized under separate state statutory schemes. Employers imposing facially neutral policies should continue business as usual, ensuring that they are imposing policies or other job requirements for legitimate business purposes.

If you have questions about the impact of any Executive Order issued by the President on your operations, contact a member of Spilman’s labor and employment team.