President Trump continues to take executive action to reshape civil rights enforcement. On April 23, 2025, he issued an executive order titled Restoring Equality of Opportunity and Meritocracy, which seeks to “eliminate the use of disparate impact liability in all contexts to the maximum degree possible.”
What Is Disparate Impact Liability?
Disparate impact is a legal theory holding that differences in outcomes among races, sexes, or similar protected groups indicate unlawful discrimination, even without discriminatory intent or policies. Accordingly, under the law, an employer can be held liable for seemingly neutral policies or practices that have a disproportionate impact on a particular group of individuals based on a protected characteristic.
For example, under the Biden administration, the Equal Employment Opportunity Commission (EEOC) scrutinized the use of artificial intelligence (AI) in hiring (such as candidate selection procedures) for disparate impact discrimination. The EEOC issued guidance stating that it would apply Title VII’s legal principles to evaluate whether AI-based employment decisions unlawfully discriminated against protected classes. The EEOC, under the Trump administration, has since removed this guidance from its website.
What Does the Executive Order Do?
President Trump’s executive order states that “disparate impact liability has hindered businesses from making hiring and other employment decisions based on merit and skill, their needs, or the needs of their customers.” It further asserts, “Disparate-impact liability all but requires individuals and businesses to consider race and engage in racial balancing to avoid potentially crippling legal liability. It not only undermines our national values, but also runs contrary to equal protection under the law and, therefore, violates our Constitution.”
Based on the accompanying Fact Sheet, the executive order takes the following actions:
The executive order also directs the Attorney General to review whether the federal government can preempt state laws or regulations that “impose disparate impact liability based on a federally protected characteristic such as race, sex, or age.”
What Does this Mean for Employers?
While this executive order signals a substantial policy shift by the administration, it does not change existing law. Courts nationwide continue to recognize disparate impact as a valid legal theory under various federal statutes, such as Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (ADEA), and the Fair Housing Act. Certain state laws have also codified disparate impact liability. While federal agencies may hold back from enforcing disparate impact legal claims, private causes of action are still viable, and courts are not required to rely on the executive order when ruling on such claims. Legal exposure for employers, therefore, still exists.
The executive order ultimately sets the wheels in motion to potentially change the framework of disparate impact liability in the future. Employers, however, at this time should continue monitoring their policies and practices for potential disparate impacts. We expect additional guidance on this executive order from federal agencies regarding how this will impact their enforcement efforts and anticipate potential legal challenges. Employers are advised to consult Employers Council before changing any practices based on the executive order alone and reach out with any questions. You can contact us at info@employerscouncil.org.
Drew Hintze is a managing attorney for Employers Council.