New Executive Order Seeks to Limit Disparate-Impact Liability

On April 23, President Donald Trump issued the Executive Order on Restoring Equality of Opportunity and Meritocracy, directing federal agencies to deprioritize enforcement actions based solely on disparate-impact theories. The order criticizes disparate-impact liability as a distortion of civil rights law, describing it as a tool that “mandates, rather than proscribes, discrimination.”

Disparate impact, sometimes called adverse impact, is the legal theory that a policy that appears neutral and is applied equally can still be illegal if it disproportionately harms people based on protected characteristics, such as race or sex. Under Title VII of the Civil Rights Act of 1964, an employer may be liable for disparate impact unless it can show that the policy is job-related and consistent with business necessity, and that no less discriminatory alternative exists.

Although the order applies only to federal agencies, it could influence broader enforcement trends. It also reopens long-standing constitutional debate over disparate impact in civil rights law — a debate unlikely to be fully resolved before mid-2026, likely the earliest the Supreme Court could rule on it.

Additionally, the executive order directs the attorney general and the chair of the Equal Employment Opportunity Commission to issue guidance promoting skills-based hiring by reducing unnecessary degree requirements, a development employers should monitor closely.