President Trump Issues Executive Order Addressing Disparate-Impact Liability
Client Alert | April 25, 2025
Gibson Dunn’s DEI Task Force is available to help clients understand what these and other expected policy and litigation developments will mean for them and how to comply with new requirements.
On April 23, President Trump issued an Executive Order entitled Restoring Equality of Opportunity and Meritocracy. The order seeks to “eliminate the use of disparate-impact liability in all contexts to the maximum degree possible.”
Disparate impact is a theory of discrimination applied when a facially neutral practice has a statistically significant impact on a protected group. According to the Executive Order, “disparate-impact liability” creates “a near insurmountable presumption of unlawful discrimination … 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.” The order criticizes disparate-impact liability as “all but requir[ing] individuals and businesses to consider race and engage in racial balancing to avoid potentially crippling legal liability.” Thus, according to President Trump, disparate-impact liability prevents employers from “act[ing] in the best interests of the job applicant, the employer, and the American public” and undermines “meritocracy,” “a colorblind society,” and “the American Dream.”[*]
A. Regulatory Changes
Section 3 and Section 5 of the Executive Order direct the repeal or amendment of certain regulations that impose disparate-impact liability on, and require affirmative action by, recipients of federal funding under Title VI, such as universities, nonprofits, and certain contractors. Section 3 states that it is revoking the “Presidential approval” of these regulations. (Title VI provides that no “rule, regulation, or order” implementing the statute “shall become effective unless and until approved by the President.” 42 U.S.C. § 2000d-1.) And Section 5(a) directs the Attorney General to “initiate appropriate action to repeal or amend” those regulations.
The Title VI regulations identified by the Executive Order for repeal prohibit recipients of federal funding from “utiliz[ing] criteria or methods of administration which have the effect of subjecting individuals to discrimination,” selecting “the site or location of facilities” in a manner that has “the purpose or effect of defeating or substantially impairing the accomplishment of the objectives” of Title VI, or engaging in “employment practices” that “tend[]” to discriminate. 28 C.F.R. § 42.104(b)(2), (b)(3), (c)(2). The regulations also allow recipients to “take affirmative action to overcome the effects of conditions which resulted in [discrimination],” even if there were no prior discrimination by the recipient. § 42.104(b)(6)(ii).
Section 5(b) also directs the Attorney General, “in coordination with the heads of all other agencies,” to review “all existing regulations, guidance, rules, or orders that impose disparate-impact liability or similar requirements,” and to “detail agency steps for their amendment or repeal, as appropriate under applicable law.” Unlike Section 5(a), this portion of the Executive Order is not limited to Title VI, and likely contemplates Title VII, the Fair Housing Act, the Age Discrimination in Employment Act, the Affordable Care Act, and the Equal Credit Opportunity Act, several of which are mentioned in other sections of the order.
Section 7 of the Executive Order further instructs the Attorney General to “determine whether any Federal authorities preempt State laws, regulations, policies, or practices that impose-disparate-impact liability,” and to “take appropriate measures consistent with the policy of this order.” Section 7 also directs the Attorney General and Chair of the Equal Employment Opportunity Commission (EEOC) to “issue guidance or technical assistance to employers regarding appropriate methods to promote equal access to employment regardless of whether an applicant has a college education.”
B. Enforcement Actions
Section 4 of the Executive Order directs all federal agencies to “deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability.” Consistent with that direction, Section 6 instructs all heads of federal agencies, including “the Attorney General,” “the Chair of the Equal Employment Opportunity Commission,” “the Secretary of Housing and Urban Development, the Director of the Consumer Financial Protection Bureau, the Chair of the Federal Trade Commission, and the heads of other agencies responsible for enforcement of the Equal Credit Opportunity Act (Public Law 93-495), Title VIII of the Civil Rights Act of 1964 (the Fair Housing Act (Public Law 90-284, as amended)),” to “assess” or “evaluate” all pending proceedings relying on disparate-impact theories, including under Title VII, and “take appropriate action” within 45 days. Agencies must conduct a similar review of “consent judgments and permanent injunctions” within 90 days.
C. Analysis
As a result of this Executive Order, federal agencies are unlikely to initiate investigations or enforcement actions relying on disparate-impact theories. They might also close, dismiss, or narrow existing investigations, enforcement actions, and ongoing monitorships pursuant to consent decrees or other agreements where the underlying legal theory relied on disparate-impact liability. Companies facing such investigations, actions, and monitorships might wish to ask for their closure in light of the order.
Agencies also may move to repeal or amend regulations and guidance documents imposing or recognizing disparate-impact liability, such as the EEOC’s guidelines concerning affirmative action that address disparate-impact liability. See 29 C.F.R. Part 1608. Among other things, the current EEOC guidance opines that affirmative action plans are allowed to remedy “employment practices” that “[r]esult in disparate treatment,” even if there is no “violation of Title VII.” 29 C.F.R. § 1608.4(b). The EEOC may repeal or amend these guidelines, including because it is consistent with President Trump’s prior repeal of Executive Order 11246 and Acting Chair Lucas’s view that such plans may be used in “very limited circumstances.” And given that Title VII provides that “good faith” compliance with a written EEOC “interpretation or opinion” is a defense to liability, 42 U.S.C. § 2000e-12(b), rescission of the affirmative action plan guidelines could eliminate a safe harbor if the guidelines are formally rescinded. Employers with affirmative action plans should review their plans and consider whether to make changes in light of forthcoming EEOC action.
Litigation challenging the actions directed by the order is possible. Title VI is silent, for example, on whether the President may unilaterally revoke approval of regulations without a full notice-and-comment rulemaking process. Democratic state attorneys general might also litigate if the Trump Administration takes the position that federal laws preempt state laws or regulations that impose or recognize disparate-impact liability.
Meanwhile, the order does not directly impact private plaintiff litigation invoking disparate impact. The order also has no immediate impact on existing disparate-impact case law. However, litigation catalyzed by the order could lead to reconsideration of precedents upholding disparate-impact theories of liability, such as the Supreme Court’s decision interpreting Title VII in Griggs v. Duke Power Co., 401 U.S. 424 (1971).
[*] This order is consistent with other Administration actions regarding disparate-impact liability. On April 23, for example, President Trump issued an executive order rejecting the use of disparate-impact analysis to evaluate the lawfulness of school discipline. And earlier this year, Attorney General Bondi ordered the Department of Justice to issue updated guidance that “narrow[s] the use of ‘disparate impact’ theories that effectively require use of race- or sex-based preference” and “emphasize that statistical disparities alone do not automatically constitute unlawful discrimination.” Moreover, these actions were proposed in the Project 2025 policy document.
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. To learn more about these issues, please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any leader or member of the firm’s DEI Task Force or Labor and Employment practice group:
Jason C. Schwartz – Partner & Co-Chair, Labor & Employment Group,
Washington, D.C. (+1 202.955.8242, jschwartz@gibsondunn.com)
Katherine V.A. Smith – Partner & Co-Chair, Labor & Employment Group,
Los Angeles (+1 213.229.7107, ksmith@gibsondunn.com)
Mylan L. Denerstein – Partner & Co-Chair, Public Policy Group,
New York (+1 212.351.3850, mdenerstein@gibsondunn.com)
Zakiyyah T. Salim-Williams – Partner & Chief Diversity Officer,
Washington, D.C. (+1 202.955.8503, zswilliams@gibsondunn.com)
Naima L. Farrell – Partner, Labor & Employment Group,
Washington, D.C. (+1 202.887.3559, nfarrell@gibsondunn.com)
Cynthia Chen McTernan – Partner, Labor & Employment Group,
Los Angeles (+1 213.229.7633, cmcternan@gibsondunn.com )
Molly T. Senger – Partner, Labor & Employment Group,
Washington, D.C. (+1 202.955.8571, msenger@gibsondunn.com)
Greta B. Williams – Partner, Labor & Employment Group,
Washington, D.C. (+1 202.887.3745, gbwilliams@gibsondunn.com)
Zoë Klein – Of Counsel, Labor & Employment Group,
Washington, D.C. (+1 202.887.3740, zklein@gibsondunn.com)
Anna M. McKenzie – Of Counsel, Labor & Employment Group,
Washington, D.C. (+1 202.955.8205, amckenzie@gibsondunn.com)
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