Trump Seeks to End Title VII Disparate Impact Liability

A new Executive Order (EO) would upend federal employment discrimination law by eliminating liability for disparate impact – one of the major categories of discrimination cases.

Disparate impact refers to the idea that some employment policies and practices that are not obviously or intentionally discriminatory nevertheless result in disproportionate harm to individuals with certain protected characteristics. By focusing on the effects of employers’ policies and practices, rather than solely on their motive or intent, disparate impact broadens the scope of potential liability under Title VII and encourages employers to proactively assess the impact of their actions on protected groups.

An employer is not necessarily prohibited from adopting a practice with a disparate impact but generally must show that the practice is a business necessity and there is not a reasonable alternative. Policies that have been successfully challenged under disparate impact theory include certain physical ability assessments, standardized tests, background checks and educational requirements.

The EO, titled Restoring Equality of Opportunity and Meritocracy, declares disparate impact liability under civil rights laws to be “contrary to equal protection under the law.” Disparate impact liability, the EO claims, “all but 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” and “all but requires individuals and businesses to consider race and engage in racial balancing to avoid potentially crippling legal liability.”

The EO directs the EEOC and other federal agencies to:

• Deprioritize enforcement of all laws and regulations that impose disparate impact liability; and
  
• Assess (and potentially abandon) all pending investigations or lawsuits involving disparate impact claims.

The Attorney General is directed to:

• Report on and detail steps to amend or repeal any existing regulations, guidance, rules or orders that impose disparate-impact liability; and
  
• Determine whether state laws and regulations imposing disparate impact liability are preempted by federal law.

In addition, both the EEOC and the Attorney General are directed to issue guidance for employers on ensuring equal access to employment regardless of whether an applicant has a college education.

Legal challenges to the EO are likely. Because disparate impact liability is part of the text of Title VII, it is unclear whether many of the directives in the EO can be carried out under existing law.