In April of 2025, President Donald Trump issued an Executive Order (“EO”) titled “Restoring Equality of Opportunity and Meritocracy.” The EO directed federal agencies to “eliminate the use of disparate-impact liability in all contexts to the maximum degree possible.” The EO is yet another major shift in the workplace, which could have far-reaching implications for employment discrimination claims and enforcement at the federal agency level.
Disparate-impact liability is a legal standard which provides that a neutral employment policy may still violate various antidiscrimination laws if the employment practice has a disproportionately adverse effect on a protected class. In other words, even in the absence of any discriminatory intent, employers could be held liable for discrimination if their policies or actions disproportionately affected individuals with a protected characteristic. For example, if an employer’s hiring practices disproportionately affected a protected class, the employer could be liable under a disparate-impact theory.
Disparate-impact liability was first recognized by the United States Supreme Court in Griggs v. Duke Power Co., 401 U.S. 424 (1971). The Griggs Court held an employer’s requirement of either having a high school diploma or passing an intelligence test to obtain employment was invalid because such requirements disproportionately affected applicants with no justifiable basis based on race. Disparate-impact liability has also been recognized under the Age Discrimination in Employment Act, Americans with Disabilities Act, and Title VII. Since Griggs, disparate-impact liability has been consistently reaffirmed and applied by courts nationwide.
President Trump’s EO, therefore, signals a significant shift from this precedent and a new federal focus. President Trump’s administration suggests “disparate-impact liability has hindered businesses from making hiring and other employment decisions based on merit and skill,” thus harming the employer and public. Based on this position, the EO directs all federal agencies to “deprioritize enforcement of all statutes and regulations” that include disparate-impact liability. Practically, this signals to employers that the Equal Employment Opportunity Commission (EEOC), among other federal agencies, will likely no longer enforce or pursue disparate-impact liability at the administrative level. Indeed, guidance on disparate-impact liability has already been removed from the EEOC’s website. Thus, while the EO does not change current Supreme Court precedent, it has already had a far-reaching impact on federal agencies.
Similarly, although the EO directs only federal agencies, the EO also attempts to lay the groundwork for preemption of state-law disparate-impact protections. The EO instructs the Attorney General to “determine whether any Federal authorities preempt State laws, regulations, policies or practices that impose disparate-impact liability.” This additional instruction in the EO could pave the way for challenges to state-level disparate-impact regulations and laws.
The EO indicates a tumultuous future for laws surrounding disparate-impact liability. Although there are decades of precedent applying disparate-impact theory, it is unclear how courts will handle the EO and the EO’s effect if any, in the courtroom. In light of this EO, it is important for employers to review current policies or practices. The employment law group at Davenport, Evans, Hurwitz & Smith can answer any questions you may have about this shift and provide clarity where needed.
For help ensuring compliance, contact a Davenport Evans lawyer at 605-336-2880, [email protected], or find a specific attorney on our Our Lawyers page.
Davenport, Evans, Hurwitz & Smith, LLP, located in Sioux Falls, South Dakota, is one of the state’s largest law firms. The firm’s attorneys provide business and litigation counsel to individuals and corporate clients in a variety of practice areas. For more information about Davenport Evans, visit www.dehs.com.