The End of Disparate Impact? | Center for Equal Opportunity

In the update below, CEO extern Louis Chuang discusses how the EEOC will no longer use disparate impact theory to bring claims of discrimination against employers. The Center for Equal Opportunity has long been a critic of disparate impact, testifying before Congress, writing opinion articles on the topic, and most recently moderating podcasts to explain the origin of disparate impact theory and its consequences.

As a result of Executive Order 14281, “Restoring Equality of Opportunity and Meritocracy,” the Equal Employment Opportunity Commission (EEOC) announced that it will close all pending charges based solely on allegations of disparate impact discrimination by September 30, 2025. The EO instructed agencies to cease using disparate impact analysis in federal civil rights claims.

Disparate impact analysis has allowed agencies to find even facially neutral employment practices (such as an aptitude test) to be racially discriminatory, even when there was no evidence that an employer intended to discriminate. So long as the plaintiff could show a disproportionately adverse effect on a protected class, an employer could be found liable for racial discrimination. The U.S. Supreme Court has previously criticized the disparate impact theory of liability as having the potential to “invalidate[] a whole range of tax, welfare, public service, regulatory, and licensing statutes that may be more burdensome to the poor and … average black [American] than to the more affluent white.” Washington v. Davis, 426 U.S. 229, 248 (1976).

Prior to this order, left-wing institutions across America invoked disparate impact to justify racial balancing in criminal law, affirmative action, and administrative agency actions, among many others. That trend accelerated under the Biden Administration. According to some estimates, the Biden Administration diverted over $1 trillion across 24 agencies to over 460 programs to address racially disparate impacts.

President Biden’s Executive Order, “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government,” emphasized “the enormous human costs of systemic racism … and other disparities, and directed the Federal Government to advance an ambitious, whole-of-government equity agenda.” As part of that agenda, the Biden Administration required all federal agencies to produce annual “Equity Action Plans.” Here is a brief summary of some of those plans:

The U.S. Department of Agriculture vowed to (1) “identify and root out systemic discrimination in USDA programs; (2) ensure equitable access to USDA programs … by removing barriers to access … that have resulted in economic, social, and racial disparities.”
The Department of Labor insisted that “[e]ntrenched disparities in our laws and public policies, and in our public and private institutions … [left] some workers more vulnerable to injury, discrimination, exploitation, or abuse.”
The U.S. Department of Education promised to work “intentionally to … address longstanding disparities in education still faced by underserved students, families,and communities.” In Grutter v. Bollinger, 539 U.S. 306 (2003), the Supreme Court adopted such a racial balancing scheme (“critical mass”) to address the racial disparity in educational outcomes.
FEMA, on its website, condemned “worsening societal inequalities” and declared that it “must direct its resources to eliminate disparities in these outcomes.” (emphasis added) That offers little comfort to those who lost their homes for failing to meet the Biden Administration’s definition of equity.

Disparate impact theory has infected even criminal prosecutions. During the Obama Administration, for example, the DOJ-funded Vera Institute issued a report exploring the use of prosecutorial discretion to address “racial disparities” in the criminal justice system.

Even with the new EO, litigants remain free to bring their disparate impact claims in federal court. Congress codified disparate impact liability into the Civil Rights Act, allowing plaintiffs to prevail if they are able to show a disparate impact and the employer is unable to show business necessity and the lack of an equally effective alternative. Moreover, many states have their own non-discrimination laws imposing liability for disparate impact. But this move by Chair Lucas makes clear that the EEOC will no longer bring dubious claims based on a discredited theory.

Louis Chuang is a J.D. candidate at Cornell Law School and extern at the Center for Equal Opportunity.

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