How a New Executive Order Affects Disparate Impact Enforcement

A new executive order (EO) has reshaped the federal enforcement landscape — again. On April 23, President Donald Trump issued EO 14281, “Restoring Equality of Opportunity and Meritocracy,” which deprioritizes agency-level enforcement of disparate impact claims, placing greater responsibility on employers to ensure internal compliance. For HR leaders, this means navigating legal uncertainty while preserving inclusive hiring practices.  

These high-stakes implications were the focus of SHRM’s recent webinar, “Understanding the Changes to Federal Agency Enforcement of Disparate Impact Enforcement,” hosted by Alex Alonso, Ph.D., SHRM-SCP, chief data and analytics officer at SHRM. Alonso was joined by risk management expert David Cohen, founder and president of DCI Consulting, and legal expert David Fortney, co-founder of Fortney & Scott LLC, a Washington, D.C.-based law firm.

In the discussion, panelists broke down what EO 14281 means in practice and its connection to EO 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” While EO 14173 focuses on repealing requirements for federal contractors to practice affirmative action based on race and gender, EO 14281 signals a shift in enforcement priorities for disparate impact. Together, the panelists clarified how these priorities are shifting, where compliance risks remain, and what steps HR leaders should take now to stay ahead.

Enforcement Priorities Are Shifting

EO 14281 signals a significant change in how federal agencies enforce employment discrimination laws — specifically, those that relate to disparate impact, which occurs when facially neutral policies disproportionately harm protected groups.  

While the concept of disparate impact remains enshrined in Section 703(k) of the Civil Rights Act of 1991, the order instructs agencies such as the U.S. Equal Employment Opportunity Commission (EEOC) and U.S. Department of Justice (DOJ) to deprioritize its enforcement.

“Private plaintiffs can pursue claims. That means that states and other parties can pursue claims, effectively,” Fortney explained. “Essentially, we [the agencies] are not going to use our limited enforcement resources to focus on disparate impact cases. That’s the change — but it does have a lot of practical impact and effect.”  

Heightened Risk for Employers

Without agency-led enforcement, the burden of compliance shifts more heavily onto employers — especially within the public sector. Court-ordered hiring practices, such as those governing police and firefighter roles, are already being lifted in several jurisdictions. “There are a growing number of jurisdictions that had been under specific court orders with regard to testing or hiring practices,” Fortney said. “And those orders are largely now being lifted by the courts.”

Whether operating in the public or private sector, employers must stay proactive as compliance enforcement shifts, anticipating possible claims from private parties and states rather than federal government investigations.

Implications for Hiring, Promotion, and Disciplinary Processes

Private plaintiffs, as well as states and other parties, can still pursue claims independently of the EEOC and DOJ, just as before. While they will likely still need to obtain a right-to-sue letter from the EEOC, employers should consider all possible implications for hiring, promotion, and disciplinary processes to support compliance in this new era.

1. Validate the Context.

Selection tools, such as a hiring test, must be both job-related and “consistent with business necessity” tailored to specific roles. There is no “one-size-fits-all” test for hiring. It must be validated for a specific job and context. “If a selection procedure is valid and there are no other reasonable alternatives, it is legal even if there is an adverse impact,” Alonso explained.

For example, a physical strength test may lawfully be used for firefighter roles due to essential job functions, even if it has a disparate impact. But using the same test for an office role with no physical requirements would likely be unjustifiable.

2. Let the Data Speak.

Employers should already be regularly collecting data on hiring, promotions, and disciplinary practices. Obtaining this data and looking at it in a proactive manner to make informed decisions to address potential issues related to Title VII liability is imperative for multiple reasons. Cohen said it is still a recommended best practice for businesses to conduct workforce analytics, as “the EEOC will still use statistics and pursue disparate treatment pattern and practice cases.”  

Additionally, there remains a private right of action for disparate impact claims. Fortney added that this “ongoing collection of data to do barrier analytics to determine whether you have the potential for those problems” should remain top of mind for organizations.  

Disparate impact and disparate treatment “both use statistics, but one requires intent. The other one does not require intent,” Cohen added.

For example, in the watershed case Griggs v. Duke Power Co., the Supreme Court explored the question of requiring certain employees to hold high school degrees to transfer to positions in certain departments outside of “labor,” which were traditionally the lowest-paid positions. It found that the education requirement functionally excluded certain groups while failing to demonstrate a clear business need. This was the first time the Supreme Court recognized disparate impact.

3. Stay Informed on Legal Developments.

Organizations should stay updated on changing priorities in enforcement. Agencies may shift their focus, but employers are still subject to existing laws, regardless of any changes to how agencies approach enforcement. 

4. Try the BEAM Framework.

To better navigate this merit-based environment while preserving inclusive outcomes, SHRM developed a five-point framework, Belonging Enhanced by Access through Merit (BEAM), that emphasizes measurable outcomes over optics. 

SHRM Member-Only Toolkit: Implementing SHRM’s BEAM Framework for Inclusion

Preparing for the Road Ahead 

While EO 14281 marks a shift in how federal agencies enforce employment law, it’s just the beginning. As additional policies and enforcement principles emerge, HR leaders must remain vigilant — balancing compliance with inclusive, business-aligned decision-making.

Now is the time to reassess that internal practices prioritize equal opportunity for all, reinforce job-related standards, and ensure data-driven fairness across the employee life cycle. By staying proactive, values-led organizations can navigate this evolving legal environment while building resilient workplaces.

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