President Trump Issues Executive Order “Restoring Equality of Opportunity and Meritocracy” Directed at Disparate Impact Discrimination Liability

On April 23, 2025, President Trump issued an Executive Order titled “Restoring Equality of Opportunity and Meritocracy” (the “Executive Order”). The stated policy purpose of the Executive Order is to “eliminate the use of disparate-impact liability in all contexts to the maximum degree possible.” According to President Trump, the Executive Order is necessary because “[d]isparate-impact liability all but requires individuals and businesses to consider race and engage in racial balancing to avoid potentially crippling legal liability.” While the Executive Order directs federal agencies to “de-prioritize” disparate impact theories of liability for employment discrimination and other civil rights cases, it is unclear what effect this will have on private employment discrimination litigation, as the concept of disparate impact liability is well established in federal (and state) court precedent.

Background on Disparate Impact

What Is Disparate Impact?

Disparate impact liability is a theory of liability under many state and federal civil rights statutes, such as Title VII of the Civil Rights Act of 1964 and 42 U.S.C. § 1981, pursuant to which an employer can be held liable for discrimination based on a facially neutral policy or decision that has a greater negative impact on members of a specific protected class. Under a disparate impact theory, a policy may subject an employer to liability even if the policy is not discriminatory on its face or designed to target any specific race, gender, ethnicity, etc., if the policy, in practice, has a detrimental effect on one of these groups. This theory is in contrast to disparate treatment discrimination, where an individual is intentionally treated differently in some way specifically because of their protected characteristic.

Why Does the Administration Want to Do Away With It?

According to the Executive Order, the Trump administration wants to eliminate this theory of liability to the extent legally possible as it has “hindered businesses from making hiring and other employment decisions based on merit and skill, their needs, or the needs of their customers” because of fear of the possibility of disparate impact liability. The Executive Order further states that the use of disparate impact liability is inconsistent with the concept of equal protection under the law because it, in fact, forces employers to consider race or other protected characteristics to avoid liability instead of making decisions solely based on merit. As explained in the Executive Order, the administration believes that “[d]isparate-impact liability is wholly inconsistent with the Constitution and threatens the commitment to merit and equality of opportunity that forms the foundation of the American Dream.”

What Does the Executive Order Require?

In general terms, the Executive Order instructs federal agencies, such as the Equal Employment Opportunity Commission (“EEOC”), to “de-prioritize” enforcement of statutes and regulations to the extent that those statutes or regulations include disparate impact liability. This specifically includes certain provisions of Title VII and its corresponding federal regulations. It also requires the attorney general to determine whether any state laws regarding disparate impact liability are preempted by corresponding federal law and requires the attorney general and chair of the EEOC to “jointly formulate and 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, where appropriate.”

It also sets out specific actions that certain federal agencies must take within the next 30, 45, and 90 days. Within 30 days, the attorney general is required to make a report to President Trump regarding:

1. all existing federal regulations, guidance, rules, etc. that impose disparate impact liability and the appropriate requirements to amend or repeal those regulations and/or rules; and
2. all other laws or decisions, including state laws, that impose disparate impact liability and the appropriate mechanisms to address any concerns about their constitutionality or other “legal infirmities.”

Within the next 45 days, the attorney general and chair of the EEOC are required to assess all pending investigations, civil lawsuits, and positions taken in ongoing matters under federal civil rights laws that rely on disparate impact liability and adjust those positions to be consistent with the Executive Order. The attorney general, chair of the EEOC, and heads of other federal agencies are also required to reevaluate all pending proceedings involving disparate impact liability and take action to ensure those positions are consistent with the Executive Order. This does not just include employment related actions, but any proceedings based upon civil rights statutes that impose disparate impact liability. Finally, within the next 90 days, all agencies, including the EEOC, are required to reevaluate their existing consent judgments and permanent injunctions that rely on disparate impact liability and take appropriate action to conform those orders and judgments to the Executive Order.

What Should Employers Do in Response to the Executive Order?

While the exact effect of this Executive Order remains to be seen, it is expected that any pending agency actions or lawsuits that were brought by the EEOC under a disparate impact theory may be dismissed or narrowed to exclude those claims. We also expect to see new guidance from the EEOC regarding disparate impact claims and guidance related to the president’s directive about equal access to those without a college education.

With that being said, employers should still be mindful about the disparate impact that their policies may have on members of protected classes. While the administration has made very clear its view on the disparate impact theory of liability, it is not clear precisely what effect this Executive Order will have on any private civil litigation brought by individual plaintiffs under a disparate impact theory. Significantly, the statutes and case law providing for this type of liability at the state and federal level remain in effect notwithstanding the Executive Order. Furthermore,  the Executive Order may have little practical impact on state level regulations, laws, and agency activity. Accordingly, employers should remain cognizant of the potential disparate impact of their workplace policies, even those that are neutral on their face.

If you have any questions about the Executive Order and how it may affect your business or employees, please contact one of the members of AGG’s Employment team.