On April 23, 2025, the White House issued an Executive Order (EO) titled "Restoring Equality of Opportunity and Meritocracy." The EO seeks to "eliminate the use of disparate-impact liability in all contexts to the maximum degree possible" with disparate-treatment liability remaining. Disparate-impact liability is a legal concept based on the proposition that seemingly neutral policies or practices may disproportionately and negatively affect a protected class. The theory of disparate impact liability focuses on outcomes resulting from policies as opposed to the intent behind the policies.
The U.S. Supreme Court first acknowledged this theory under Title VII of the Civil Rights Act of 1964 in the landmark case Griggs v. Duke Power Co. in 1971. In that case, the Court evaluated Duke Power's policy that mandated employees in its highest-paying departments either possess a specific level of education or pass an intelligence test as a condition for employment. The Court ruled the policy was unlawful because it was not "reasonably related" to the job and had a disparate impact on the Black community. In addition to employment laws, courts have endorsed disparate-impact liability as a viable legal theory under fair housing, banking, and finance laws.
Challenging disparate-impact liability by calling it "contrary to equal protection under the law," the EO describes the legal theory as creating a "near insurmountable presumption" of unlawful discrimination whenever there are differences in outcomes among various races, genders, or other groups. The EO further asserts that, at its core, disparate-impact liability requires employers to affirmatively consider race (or other protected characteristics)to avoid "crippling legal liability," such that it is "wholly inconsistent with the Constitution."
To address these concerns, the EO includes several directives:
- All executive departments are to deprioritize the enforcement of statutes and regulations that include disparate-impact liability, including Title VII.
- The Attorney General must report to the President within 30 days on all regulations imposing disparate-impact liability and suggest amendments or repeals, along with addressing any related state laws.
- Within 45 days, the Attorney General and the EEOC Chair are to assess pending investigations and civil suits involving disparate-impact liability and take "appropriate actions."
- All agencies must evaluate existing consent judgments and injunctions based on disparate-impact liability within 90 days and "act accordingly."
- The Attorney General will determine if federal authorities preempt state laws imposing disparate-impact liability and take "necessary measures."
- The Attorney General is tasked with initiating the repeal or amendment of regulations related to disparate-impact liability under Title VII of the Civil Rights Act of 1964.
- The Attorney General and the EEOC Chair are to issue guidance to employers on promoting equal access to employment, regardless of an applicant's educational background.
The Recent History of President Trump's Executive Orders
Of course, the April 23, 2025 EO is only the most recent in a long line of EOs issued this year aimed at reframing diversity principles under President Trump's directives:
January 20, 2025: An executive order mandating that federal agencies define "sex" strictly as a binary biological classification determined at conception. It requires all government identification documents to reflect this definition and prohibits the use of federal funds to promote "gender ideology."
January 20, 2025: An executive order eliminating any and all "Diversity, Equity, and Inclusion" (DEI) programs throughout the federal government. This termination includes Chief Diversity Officers, Equity Action Plans, environmental justice offices, equity-related grants/contracts, and DEI/DEIA performance requirements. The removal of these programs will be carried out by the director of the Office of Management and Budget, with assistance from the attorney general and the director of the Office of Personnel Management. Each agency, department, or commission head was directed to complete these actions within 60 days. The text of this order expresses an intention to improve public relations between the federal government and the American people by cutting programs deemed wasteful and discriminatory. It also required federal agencies to include certifications that contractors and grantees do not operate illegal DEI programs.
January 21, 2025: An executive order suspending DEI initiatives within the U.S. Department of Transportation and Federal Aviation Administration, focusing on merit-based hiring and promotion.
January 27, 2025: An executive order halting all DEI programs in the U.S. Armed Forces to promote meritocracy and eliminate discrimination, abolishing DEI offices and reviewing practices for discrimination.
February 11, 2025: An executive order initiating a plan to reduce the federal bureaucracy through the Department of Government Efficiency, limiting hiring to one new employee for every four departures and eliminating non-essential agencies and DEI initiatives.
March 1, 2025: An executive order declaring English the official language of the U.S., revoking prior mandates to improve services for limited English proficient individuals.
March 6, 2025: An executive order suspending security clearances for Perkins Coie LLP employees, terminating contracts with the firm, and limiting their access to federal buildings supposedly due to unethical practices and discriminatory hiring.
March 25, 2025: An executive order addressing concerns with Jenner and Block LLP, citing allegedly partisan actions and discrimination. It suspends security clearances for the firm's employees and directs agencies to review contracts with the firm.
April 9, 2025: An executive order targeting Susman Godfrey LLP for allegedly undermining U.S. interests and promoting discrimination. It suspends security clearances for Susman's employees and directs a review of contracts with the firm
EEOC Guidance
In connection with the EOs, on March 19, 2025, the EEOC issued new guidance in two forms for educating the public regarding DEI-related discrimination in the workplace.
Both the one page document entitled "What To Do If You Experience Discrimination Related To DEI At Work" and the Frequently Asked Questions (FAQs) available on the EEOC's website identify various sources of potential discrimination associated with DEI. These practices include:
Quotas – Specific numeric values or otherwise balancing a workforce based on protected class;
Disparate Treatment - employment decisions motivated by protected class such as hiring, firing, promotion, compensation, etc.;
Employee Segregation and Classification - limiting membership to workplace groups such as affinity groups based on protected characteristics;
Harassment – unwelcome remarks or conduct based on protected class; and,
Retaliation – in addition to traditional retaliation principles, opposing employer-mandated DEI training could be considered "protected activity."
Finally, both publications posit that in addition to creating a basis for retaliation, DEI-training may contribute to a claim for harassment or hostile work environment where it is discriminatory in "content, application, or context."
The above guidance has not been updated since the April 23, 2025 EO, which would seem to make it more difficult to demonstrate that an otherwise facially neutral "DEI" policy which happened to disparately impact a particular group violates the law. Rather, the putative plaintiff would now need to show that the policy was intended to discriminate.
What's Next
The ultimate effect of the April 23, 2025 EO—like the prior EOs—remains uncertain, especially given the potential for conflicts with state or local anti-discrimination laws. In the end, however, Congress holds the authority to amend federal statutes to specifically address disparate-impact liability. Additionally, with a number of challenges making their way through the courts, we expect further updates.
As for employers, while it may at first seem like the April 23, 2025 EO opens the doors to relaxed scrutiny of hiring and other employment practices designed to prevent inconsistent results, that decision is not without consequences. Setting aside impact-focused policies could potentially result in reinforcement of disparities between socioeconomic classes. Further, policies and practices aimed at preventing such discrepancies often serve to advance many important legitimate business practices like hiring for skills that directly relate to job duties.
Regardless, this area will continue to be the subject of review and enforcement challenges, and Buchanan will continue to monitor and update you.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
