Dominique L. Casimir and Brooke T. Iley ●
On April 23, 2025, the President issued an Executive Order (“EO”) titled “Restoring Equality of Opportunity and Meritocracy” that seeks to drastically curtail the use of disparate-impact liability in federal regulations, marking a significant shift in the federal government’s approach to civil rights enforcement. What does this mean for companies going forward?
Background
Let’s start with a review of disparate-impact liability under civil rights laws. This concept refers to practices or policies that, while seemingly neutral, disproportionately affect members of a protected class. This type of liability does not require proof of intentional discrimination; instead, it focuses on the outcomes of the policies or practices.
For example, under Title VII of the Civil Rights Act of 1964, disparate-impact liability occurs when an employment practice adversely affects one group more than another, even if the practice appears neutral. If a plaintiff can show that a policy has a disproportionately negative effect on a protected class, the burden shifts to the defendant to demonstrate that the practice is job-related and consistent with business necessity. Disparate-impact liability is also recognized under several other federal and state civil rights laws.
The EO asserts that the foundational principle of the United States is equality of opportunity, not equality of outcomes. The EO criticizes disparate-impact liability as a “pernicious movement” that, in the administration’s view, undermines meritocracy and the constitutional guarantee of equal protection. Disparate-impact liability, as described in the EO, is a legal doctrine that presumes unlawful discrimination based solely on statistical differences in outcomes among groups, even absent any discriminatory intent or facially discriminatory policy. The EO contends that this doctrine compels employers and businesses to consider race or other protected characteristics in decision-making, thereby encouraging racial balancing and undermining individual merit.
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