On April 23, 2025, President Trump signed an Executive Order aimed at eliminating the use of disparate-impact liability and ordering federal enforcement agencies to stop the enforcement of antidiscrimination laws based on disparate impact theories.

Disparate impact liability is a legal theory that is codified in Title VII of the Civil Rights Act of 1964 that allows a plaintiff to sue without fulfilling the burden of demonstrating intentional bias by pointing to practices that disproportionately affect protected groups.  In addition, under this doctrine, an employer can be held liable for neutral policies or practices that have a disproportionate impact on a particular group of individuals based on a protected characteristic.  The Executive Order (“EO”), entitled, “Restoring Equality of Opportunity and Meritocracy,” states, “It is the policy of the United States to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible to avoid violating the Constitution, Federal civil rights laws, and basic American ideals.”

The EO directs the Attorney General and the Chair of the Equal Employment Opportunity Commission to assess all pending investigations, civil suits, or positions taken in ongoing matters under every Federal civil rights law that rely on a theory of disparate-impact liability, and to take appropriate action with respect to those matters consistent with the policy of the EO.

It also directs the heads of all federal agencies responsible for enforcement of the Equal Credit Opportunity, Title VIII of the Civil Rights Act of 1964 (the Fair Housing Act, or laws prohibiting unfair, deceptive, or abusive acts or practices to evaluate all pending proceedings that rely on theories of disparate-impact liability and take appropriate action with respect to such matters consistent with the policy of the EO.  

It is important to point out that the EO calls to prevent federal agencies from pursuing claims or taking positions that rely on theories of disparate impact and it does not prevent private individuals from pursuing such claims.  We will continue to monitor developments regarding this EO and will keep you apprised of any guidance that is released pertaining to same.  Should you have any questions, please contact Ali Law Group.

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