The Trump administration’s challenge to discrimination protections based on a disparate impact theory extends beyond federal regulations. The April 23, 2025, executive order additionally directs the Attorney General to identify all state laws or decisions that impose disparate impact liability, report any measures to be taken to address any “constitutional or other legal infirmities” in those laws and determine whether federal action is warranted, and coordinate with other agencies to determine whether federal authorities preempt state laws imposing disparate impact liability. The directive is vague as to what it is targeting, or what “legal infirmities” it is contemplating.
Laws Limiting AI Hiring Tools May Face Scrutiny
One clue lies in what seems like a logical leap in the executive order’s opening critique of disparate impact theory. After excoriating the “near impossibility” for organizations to survive a claim filed under that legal theory (which appears to be a reaction to government actions like the claim challenged in Louisiana v. EPA, discussed in Part II of this series), the executive order asserts that disparate impact theory “has made it difficult, and in some cases impossible, for employers to use bona fide job-oriented evaluations when recruiting.”
There may be some example of a legal claim behind that assertion, but the basis for that is not immediately obvious. A possible underlying concern may relate to recent actions by states and localities (New York City being the first) to actively regulate the use of artificial intelligence (AI) in screening job candidates for hire. One biased human can only have so much reach in the context of hiring decisions, while use of an automated tool with biases can have immensely broader impact. Without fully understanding the technology, legislatures have been endeavoring to construct protections for individual employees against the bias that will inherently be baked into any AI screening tool. Complying with those requirements for bias testing and reporting can be complex, and dubiously helpful to individuals, as I discussed in a prior blog article when the New York City requirements were first becoming effective. It could well be that some of those legal requirements have drawn the ire of the Trump administration and will come under the Attorney General’s microscope.
Federal Challenges to State Law Protections Face Multiple Hurdles
As a general legal principle, our system of government vests powers in the states to regulate all that which is not preempted by federal law. Notwithstanding the behemoth that the federal government has become, it is and always has been a governing body with limited powers, and all its authority must relate back to specific provisions in the Constitution as it has been amended over the years. The states do not have those same constrictions; as long as state laws are consistent with federal law, they can provide individuals with greater legal protections.
It is unclear what, if any, federal law the administration could claim is violated by state and local laws regulating the use of AI in screening job applicants. The existing laws and proposed legislation are written to be facially neutral and require bias testing, aligned with the standards developed from Griggs and embodied in Title VII.
Similarly, other laws adopted by states and localities at least partially in the interest of addressing bias and past discrimination set up procedural requirements applicable to all job applicants and employees, including: restrictions on consideration of past criminal history or poor credit history in the hiring process; pay transparency laws; and prohibitions on requiring applicants to disclose their salary history. None of these seem to facially violate federal discrimination laws, much less the Constitution.
Where This Leaves Employers
Employers should continue to comply with state and local employment laws but remain attuned to news reports and legal updates. Claims by the Trump administration that a state or local law or regulation related to disparate impact liability violates, or is preempted, by federal law will likely be resolved through litigation, and can take years to make their way through the courts.
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This five-part series addresses the Trump Executive Order seeking to end discrimination protections based on a disparate impact theory of liability. Our approach is threefold:
- Explore the why – Part II of our series focuses on the origins of disparate impact theory and what may be driving the administration’s current attack.
- Assess the what and how – Parts III and IV look at federal laws and regulations, while this Part V looks at state and local laws to consider what is gone already, what is targeted for revision, and how that might be effectuated.
- Consistently reflect back on the impact – Parts III and this Part V particularly highlight what this means for employers, where the change is potentially beneficial to them, and what the guideposts are going forward.
By Tracey I. Levy





