ANALYSIS: Disparate Impact EO Is More Symbolic Than Impactful

President Trump issued Executive Order 14281 on April 23, seeking to eliminate disparate impact liability to the maximum degree permissible by law, including with respect to the Equal Employment Opportunity Commission’s enforcement of Title VII. The executive order achieves a symbolic victory for the Trump administration, but it does not significantly diminish the exposure of private-sector employers to potential disparate impact claims.

EO 14281 also draws a tenuous connection between disparate impact liability and the DEI programs that have been targeted under other executive orders. But the EEOC has made only sparing use of disparate impact liability over the years. And when it has pursued disparate impact claims, it was largely on behalf of populations that the Trump administration and EO 14281 are seeking to protect, rather than those who have been the primary focus of the DEI movement.

In fact, EO 14281 might actually work in favor of employers interested in keeping their employee affinity group programs—one of the employment initiatives that face elevated risk from the executive orders on DEI and related EEOC guidance.

EO 14281 Stresses Intent Over Impact

Disparate impact is one of two main theories of liability under Title VII of the Civil Rights Act of 1964, the other being the much more commonly invoked disparate treatment. Unlike disparate treatment claims, disparate impact claims do not require any allegations or evidence of discriminatory intent. Under a theory of disparate impact liability, an employer can be held liable for discriminating against employees or job applicants if it implements a facially neutral policy not justified by business necessity that has disproportionately impacted a protected class regardless of the employer’s motive or intent in implementing the policy.

Disparate impact liability under Title VII was recognized by the Supreme Court in Griggs v. Duke Power in 1971 before being codified into the statutory framework of Title VII by Congress in 1991. An executive order, therefore, cannot on its own eliminate the availability of disparate impact liability for private litigants. That can only be achieved by an act of Congress or a determination by the Supreme Court that disparate impact liability violates the Constitution (which EO 14281 alleges).

In any case, the attempted elimination of disparate impact liability via EO 14281 is a symbolic victory for the Trump administration. Through implementing EO 14281, the administration seeks to reverse the cultural axiom, championed by the DEI movement, that impact matters more than intent. In the eyes of the Trump administration, without intent, impact is irrelevant.

Disparate Impact Liability and DEI

It is evident that the Trump administration views disparate impact liability and DEI as related issues. EO 14281 echoes the language and concerns expressed in Trump’s anti-DEI executive orders, especially EO 14173, which contains provisions aimed at private-sector employers. (Indeed, EO 14281, “Restoring Equality of Opportunity and Meritocracy” has a title similar to EO 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”)

While EO 14281 does not mention diversity, equity, and inclusion or DEI by name, it states that disparate impact liability is a “key tool” of a “pernicious movement” threatening equal opportunity principles that is described consistently with Trump’s characterization of DEI in the anti-DEI executive orders.

Just as he and his administration have said of DEI, Trump has taken the position through EO 14281 that disparate impact liability not only fails to deter or cure unlawful discrimination, but rather causes it. The idea is that the existence of disparate impact liability “all but requires” employers to consider protected characteristics such as race and sex in their employment decisions in order to balance out any statistical disparities that may carry a high risk of inviting a disparate impact claim. Put differently: In order to escape costly liability for unintentional discrimination, employers are committing intentional discrimination. Or, if discrimination requires intent, as Trump appears to believe it should, then employers would be actually discriminating in order to prevent the false perception that they had discriminated.

To be fair, disparate impact liability does allow plaintiffs to make a case of discrimination from statistically disproportionate figures in workforce demographics, and the DEI era did involve high-profile public scrutinizing of the numbers and proportions of women and racial minorities in particular roles at major companies across various industries. In fact, many companies proudly announced their goals of increasing these figures including, in some cases, setting specific target percentages to be reached by specific dates. And following their initial announcements, a number of these companies even released reports on their progress toward their hiring and promotion goals.

However, disproportionate workforce demographics alone do not make a case of disparate impact discrimination. For disparate impact liability to attach under Title VII, a complainant must be able to point to the particular employment practice that caused the disparate impact. And an employer can defend against a disparate impact claim by showing that the employment practice at issue is job-related and required by business necessity.

EEOC-Filed Disparate Impact Litigation

The EEOC is the only source of private-sector disparate impact employment discrimination claims that EO 14281 has the ability to stifle. However, disparate impact liability has not been wielded by the EEOC as a “key tool” in efforts to further DEI, according to the available data.

A search of Bloomberg Law dockets shows that during Fiscal Years 2009-2024 spanning the last four presidential terms, the EEOC initiated just 20 merits lawsuits alleging disparate impact discrimination. Merits lawsuits include direct lawsuits and interventions alleging violations of the substantive portions of the statutes enforced by the EEOC and lawsuits to enforce administrative settlements. The total includes complaints where disparate impact claims were filed alongside disparate treatment claims and excludes from the search results one complaint containing a non-substantive reference to disparate impact.

These 20 lawsuits are out of the 2,570 total complaints filed by the EEOC during that period according to a Bloomberg Law dockets search. Of these, 2,487 are merits lawsuits, according to the EEOC’s Litigation Statistics. That means that less than 1% of the merits lawsuits initiated by the EEOC during this period involved disparate impact claims.

As for non-litigious EEOC activity, such as investigations and administrative actions, it is difficult to quantify how much of it involves disparate impact because the EEOC does not release disparate impact-specific statistics and, unlike litigation, EEOC investigations are confidential. Therefore, litigation is the best window we have into the nature of disparate impact claims pursued by the EEOC.

The vast majority of the 20 disparate impact cases filed during FY 2009-2024 focused on hiring or job retention practices. These include the use of criminal or credit history, written exams, physical abilities tests, and recruiting policies. The recruiting policies at issue include the use of word-of-mouth, employee referrals, or job advertisements on Spanish-language radio stations.

The most commonly challenged practice was the use of physical abilities tests in hiring for truck driving, grocery filling, and other roles requiring physical labor—which was alleged to have disproportionately impacted female job applicants. Four such complaints were filed by the EEOC, all during Trump’s first term.

Overall, with nine cases, Trump’s first term was the most prolific time for EEOC-filed disparate impact litigation during the last four presidential terms. The EEOC filed five such cases in each of Obama’s terms, and only one case under the Biden administration.

EO 14281 directs the EEOC to withdraw from any litigation involving disparate impact claims—but the truth is, there is only one pending lawsuit to withdraw from.

These 20 cases show that the disparate impact claims the EEOC has brought in court have overwhelmingly been on behalf of actual or prospective employees in blue-collar roles or roles not requiring a college degree—workforces not typically affected by diversity pledges, and a population that E.O. 14281 aims to benefit. The executive order directs the Attorney General and the Chair of the EEOC to jointly issue guidance to employers on promoting equal access to employment for job applicants regardless of whether they are college-educated.

In stark contrast, the attention of the general public and major companies engaged in the DEI movement has been overwhelmingly focused on representation in senior leadership and other high-paying, prestigious white-collar roles in business, Big Law, tech, and so on.

Blessing in Disguise for Employee Affinity Groups?

One area of DEI that EO 14281 may actually affect is the EEOC’s enforcement of “DEI-related discrimination” claims based on employers’ employee resource group (ERG) or employee affinity group programs.

The most legally vulnerable DEI programs involve exclusive job opportunities—such as internships, fellowships, mentorships, sponsorships, leadership development programs, and training programs—explicitly reserved for members of a particular race, sex, or other protected characteristic. A legal challenge to such programs does not require a theory of disparate impact liability and can be made under a disparate treatment analysis, as such programs involve explicit protected group-based benefits and exclusions.

In contrast, employee affinity groups sit in a more medium-risk space and their legal vulnerability depends significantly on their structure and purpose within a particular workplace. Without disparate impact liability in its toolkit, the EEOC will have a harder time making a case of DEI-related discrimination based on an employer’s affinity group program in which membership in any affinity group and participation in any affinity group event are open to all employees regardless of their protected characteristics.

In Griggs v. Duke Power, in which the Supreme Court initially recognized the existence of disparate impact liability under Title VII, plaintiffs brought their discrimination claims under 42 U.S.C. § 2000e-2(a)(2). Sections (a)(1) and (a)(2) constitute Title VII’s two prohibitions on discrimination, and the Supreme Court has frequently referred to Section (a)(1) as the “disparate treatment” provision and Section (a)(2) as the “disparate impact” provision. Yet it is Section (a)(2)—which prohibits employers from limiting, segregating, or classifying employees in any way which would deprive an individual of employment opportunities or otherwise adversely affect their status as an employee, because of their protected characteristics—that the EEOC cited in its technical assistance document issued on March 19 to support its statement that certain workplace groups may violate Title VII.

While plaintiffs could still bring private lawsuits to raise disparate impact claims against employers’ affinity group programs, these programs have not been a focus in the mounting private lawsuits challenging workplace DEI. So employers don’t need to rush to scrap their employee affinity group programs altogether and can instead conduct a DEI compliance audit to assess their programs’ risk and make any modifications necessary to ensure they are not exclusionary based on protected characteristics, or even worse—conferring exclusive employment benefits.

Overall, employers should be aware that their potential exposure to a disparate impact liability claim is not significantly diminished by the existence of EO 14281, and they must continue to ensure that their employment policies and practices are not disproportionately impacting any protected group unless they are justified by demonstrable business necessity.

Other analyses of the executive orders featured in the report cover AI regulation, immigration, DEI, and transgender health issues.

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