EEOC Cuts Funding to States’ Workplace Transgender Bias Probes

The EEOC plans to stop paying state regulators to investigate bias against transgender workers or unintentional bias against any worker under disparate impact theory following Trump administration directives.

The Equal Employment Opportunity Commission will no longer provide financial backing for state and local agencies’ efforts on these cases, which the federal civil rights agency previously helped fund under workshare agreements, according to a May 20 memo viewed by Bloomberg Law.

The change is in line with President Donald Trump’s executive orders limiting disparate impact theory and directing the federal government to recognize only two sexes, the memo said.

The funding cuts will amplify changes the EEOC has already made to its own enforcement work in these two areas, and will deprive states of backing they’ve previously relied on.

The New York Times was first to report on the EEOC memo. The commission declined to comment Wednesday.

EEOC Director of Office Field Programs Thomas Colclough in the memo told directors of the agency’s state and local counterparts the commission won’t grant “credit for intakes or charge resolutions” implicated by the two executive orders. The change will be retroactively in effect from Jan. 20, when Trump returned to office.

All charges that include gender identity, transgender status, or disparate impact claims will be “subject to substantial review” in order to “ensure that such charges are appropriately handled for purposes of credit,” Colclough wrote.

Trump signed an executive order directing the federal government to recognize only two sexes on Inauguration Day. The EEOC responded by elevating transgender bias charges for internal review, as well as seeking to dismiss transgender bias cases brought by the agency in the courts under the Biden administration.

Worksharing Pacts

Trump signed an executive order April 30 directing the EEOC and DOJ to abandon disparate impact liability theory in investigations and lawsuits. Under disparate impact, an employer can be liable for a facially neutral policy that adversely impacts a protected class. Conservative legal experts have criticized the legal theory for focusing too much on outcomes over intent.

Under a worksharing agreement the EEOC has contracts with 90 Fair Employment Practice Agencies nationwide that process tens of thousands of employment discrimination charges annually. If a FEPA has a worksharing agreement with the EEOC, charges filed will also be automatically filed with the other agency in a dual process.

All employment discrimination claims must be filed to the EEOC or related state or local agency.

Although the EEOC may not pursue such claims, states and localities can still proceed and workers can bring private cases.

Many states already have transgender protections and references to disparate impact discrimination written into their laws.

“New Jersey law prohibits discrimination based on gender identity and disparate impact discrimination, and our Division on Civil Rights will continue to recognize such claims and enforce our laws in New Jersey,” Democratic state attorney general Matthew Platkin said in a statement.

A spokesperson from Platkin’s office said it’s currently contracted with the EEOC on 500 total cases.

A New York State Division of Human Rights spokesperson said the memo doesn’t impact “protections guaranteed to New Yorkers” under state law and the division will continue probing gender identity bias.