Employment Law Update: May 15 Disparate Impact Executive Order
Date: May 16, 2025
“Disparate Impact” generally refers to policies or practices that, while appearing neutral on their face, may have a disproportionally greater impact on a protected class, such as race, sex or age. If a plaintiff can demonstrate a statistically disparate impact on a protected class, then the employer must either defend the policy as job-related and that no other less restrictive approach is available or demonstrate that the job requirement is a bona fide occupational qualification.
The Supreme Court affirmed the disparate impact theory in Griggs v. Duke Power Co., 401 U.S. 424 (1971). In that case, the issue involved an arbitrary “intelligence test” that was unrelated to an employee’s ability to perform the job. Since then, the theory has been instrumental in directing federal policy and enforcement on a range of issues. Further, it is the legal theory underlying existing limits in many states on the use of criminal background screening on job applicants early in the hiring process.
The Executive Order claims that “disparate impact” liability imposes a “near insurmountable presumption of unlawful discrimination,” even where there was no “facially discriminatory policy or practice or discriminatory intent involved.” Thus, the Executive Order continued, the policy “all but require[d] individuals to consider race and engage in racial balancing…” In practical application, the underlying legal theory imposes no such considerations, yet the repeated assertions that disparate impact theory is unconstitutional suggest that further Executive action on this issue may be just down the road. Although the Executive Order does not invalidate Supreme Court precedent or similar state or local laws on this issue, it does discuss the need for further review to determine the ability to preempt any applicable State laws.
For now, private businesses may assume that federal agencies will be unlikely to initiate investigations or enforcement actions relying on “disparate impact theory.” There may also be a narrowing of applicable regulations, making even private enforcement more cumbersome or unrealistic. Any businesses currently under investigation for policies or practices with a discriminatory impact may also see the curtailment of enforcement activity or have a new basis to seek closure of such cases.
Please reach out to Whiteford’s Labor and Employment Law attorneys with any questions.
The information contained here is not intended to provide legal advice or opinion and should not be acted upon without consulting an attorney. Counsel should not be selected based on advertising materials, and we recommend that you conduct further investigation when seeking legal representation.