A new Trump Executive Order issued April 23, 2025, directs federal government agencies to deprioritize consideration of discrimination claims that are predicated on the “disparate impact” of facially neutral policies or actions where there is no direct proof of discriminatory intent.  The Executive Order revokes presidential approvals of select prior regulations related to disparate impact considerations under Title VI of the Civil Rights Act of 1964 (which prohibits discrimination based on race, color or national origin by entities receiving federal financial assistance – including federal government contractors and grant recipients).  It then goes on to end government measures meant to prevent or redress discrimination based on a disparate impact theory of liability by directing:

• repeal or amendment of existing federal regulations;
• review of current matters; and
• consideration of future agency action.

This review is not limited to Title VI matters, but instead the executive order also directs review of regulations and actions under Title VII and even under state laws.

Phrasing of the Executive Order Warrants Asking the Why

The executive order asserts that disparate impact theory holds that “a near insurmountable presumption of unlawful discrimination exists where there are any differences in outcomes in certain circumstances among different races, sexes, or similar groups, even if there is no facially discriminatory policy or practice or discriminatory intent involved, and even if everyone has an equal opportunity to succeed.”  The executive order claims that disparate impact liability “all but requires individuals and businesses to consider race and engage in racial balancing to avoid potentially crippling legal liability,” and “has made it difficult, and in some cases impossible, for employers to use bona fide job-oriented evaluations when recruiting.”

This description of the evils of disparate impact theory deviates so starkly from my own observations in 30 years of practicing employment law, that I had to ask the why – what was behind this particular vitriol.  Far from presenting a “near insurmountable presumption of unlawful discrimination,” my experience has been that disparate impact theory was developed precisely because the opposite was true – absent that theory, in situations where individuals and organizations were careful about what they said and documented, proving discriminatory intent was what presented a “near insurmountable” evidentiary hurdle.

This article is for those who share my puzzlement and curiosity, as we explore the origins of disparate impact theory and how we could have gotten to this point.  The journey begins with the Supreme Court’s 1971 decision in Griggs v. Duke Power Company, which recognized the concept of disparate impact as a theory for holding employers liable for discrimination.  We then accelerate to 2024, and a decision from the U.S. District Court for the Western District of Louisiana in Louisiana v. U.S. Environmental Protection Agency that permanently enjoined application of Title VI disparate impact requirements in any fashion to any entity in the State of Louisiana.  The situation the state faced in that case, and the arguments it successfully raised in support of its permanent injunction, appear to be the underpinning of the current executive order.

This is the first in a two-part review of the disparate impact executive order.   Part two details the range of agency actions dictated by the executive order, and how they may impact employers.

Where Does Disparate Impact Analysis Come From?

In the early years following the passage of Title VII, the Supreme Court considered a claim from a group of Black applicants and employees who asserted that they were discriminatorily denied consideration for hire or transfer for entry-level jobs at a company because they did not have a high school diploma.  A diploma was required for all job candidates at the company’s plant, not just those in a particular racial category, and therefore the hiring requirement was facially neutral.  In practice, however, the Supreme Court, in Griggs v. Duke Power Co. (1971), recognized two issues with the diploma requirement:

1. A disproportionate number of potential Black applicants did not meet that requirement; and

2. The requirement did not actually serve a legitimate business purpose because having a diploma did not correlate to successful performance on the job.

In support of its finding of discrimination, the Court explained that Title VII requires “the removal of artificial, arbitrary, and unnecessary barriers to employment when the barriers operate invidiously to discriminate on the basis of racial or other impermissible classification.”

The Back Story to the Griggs Case

Historically, the company had only permitted Black employees at its plant to work in the Labor department.  They were excluded from transferring to any of the plant’s other four departments, all of which paid substantially more than the Labor department.  The company ended that segregation with the passage of Title VII, but gradually put degree requirements in place so that, by the end of 1965, employees could only transfer out of the Labor department into one of the other departments if they had a high school diploma or scored well enough on two aptitude tests (no matter how well they had been doing their existing job), and new employees would not be hired into even the Labor department unless they had a high school diploma or scored well enough on the aptitude tests.

From the time the high school diploma requirement was instituted to the time of trial, white employees hired before the time of the diploma requirement continued to perform satisfactorily and achieve promotions in the other departments.  The requirements were not shown to “bear a demonstrable relationship to successful performance of the jobs for which” they were used.  A disproportionate number of Black applicants lacked a high school diploma, and having received limited formal education in a formerly segregated society, many of them scored poorly on the aptitude tests.

Considering these factors, the Supreme Court held that the diploma and general intelligence testing requirements amounted to discrimination in violation of Title VII.  The Court explained that Title VII, “proscribes not only overt discrimination, but also practices that are fair in form, but discriminatory in operation. The touchstone is business necessity. If an employment practice which operates to exclude Negroes cannot be shown to be related to job performance, the practice is prohibited.”

The Court held that even if the company acted without discriminatory intent when it adopted the diploma and test requirements, that could not redeem employment procedures that “operate as ‘built-in headwinds’ for minority groups and are unrelated to measuring job capability.”

Title VII Expressly Recognizes Disparate Impact Liability

In 1991, Congress amended Title VII to expressly incorporate the Supreme Court’s analysis under Griggs into the language of the statute.  Title VII thus provides that an employer is liable for discrimination if:

• A complaining party can show the employer used a particular employment practice that causes a disparate impact on the basis of race, color, religion, sex, or national origin and
• Either the employer cannot show that the challenged practice is related to the job in question and “consistent with business necessity” or the employer can make that showing, but the complainant party presented an alternative employment practice that would have equally satisfied the employer’s business need without the same disparate impact, and the employer refused to adopt the employee’s suggested alternative.

Congress did not similarly amend Title VI.  The absence of similar language in Title VI was central to the district court’s decision in Louisiana v. EPA.

Limitations of Title VI

Passed as part of the same Civil Rights Act of 1964, Title VI provides that:

No person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.

The law directs each Federal department and agency that issues Federal grants, loans or contracts to issues regulations effectuating this principle.  In response to that directive, the Title VI Legal Manual issued by the U.S. Department of Justice reports that currently 26 federal funding agencies have Title VI regulations that include provisions addressing some version of a disparate impact standard.  The Supreme Court has considered the scope of Title VI on several occasions and has recognized the validity of regulations incorporating a disparate impact theory of liability.

District Court’s Ruling on Environmental Justice Impacts Title VI

In 2022, the Environmental Protection Agency received several complaints under Title VI, asserting a theory of environmental justice discrimination by the State of Louisiana in St. John the Baptist Parish and the Town of Mansura, at least some of which related to air permits.  The EPA investigated and closed those complaints without taking any decision or action, but then in June 2023, it objected to Louisiana’s issuance of a permit under the Clean Air Act on Title VI disparate impact grounds, directing that the state conduct an analysis to avoid any “unjustified discriminatory effect” and consider “whether the community is already disproportionately impacted either by public health or environmental burdens.”  The State of Louisiana sued, complaining that the EPA had weaponized Title VI in furtherance of its own vision of environmental justice and equity, and that its disparate-impact-based mandates were unlawful because Title VI only prohibits intentional discrimination.

The district court concluded in Louisiana v. EPA that because Title VI itself does not include a disparate impact theory (unlike its sibling Title VII), the federal government could not require the state to consider the disparate environmental impact of certain actions as a condition of receiving federal funds.  The court supported its analysis with reference to past Supreme Court decisions that have held that the Constitution’s Spending Clause forbids federal government agencies from imposing any conditions on the grant of federal dollars that are not unambiguously established in the text of the statute.  The literal language of Title VI is limited to prohibiting intentional discrimination, and therefore the court reasoned that Louisiana could not be required to take actions to prevent unintentional discrimination on a disparate impact theory.

The court held that the Supreme Court’s past decisions recognizing the validity of a disparate impact theory under Title VI were not binding precedent because they did not evaluate the regulations in the context of the Spending Clause.  The court additionally held that the “major questions doctrine” applied, under which courts provide less deference to administrative agency interpretations on issues with critical political or economic significance.  Based on this analysis and consideration of other claims, the district court ultimately issued a permanent injunction in favor of the state, which forbids the enforcement of the Title VI disparate impact regulations against any entity in the State of Louisiana.

From Environmental Justice to Employment Law

Viewed from the perspective of the EPA’s actions with respect to Louisiana (which the EPA had more successfully applied through negotiated settlements with other states), the language of the Trump executive order begins to make somewhat more sense.  The state argued in that case that “the EPA’s construction of § 602 results in a transformation of the agency’s Clean Air Act authority, converting the statute from one regulating specific pollutants and environmental impacts into a tool for far-reaching social engineering in the name of ‘equity.’”  The state’s claim is relatively consistent with the assertions in the executive order that the legal theory of considering disparate impact imposes a “near insurmountable presumption of unlawful discrimination” or requires “racial balancing to avoid potentially crippling legal liability.”

Although limited to a single state, the rationale behind the district court’s decision in the Louisiana v. EPA case can be applied more broadly and it appears that is precisely the intention of the Trump administration.  The attack on Title VI, therefore, seems likely to offer some measure of benefit to government contractors and grant recipients, that they will not be required to confirm that programs they are offering can survive an analysis of whether they have a disparate impact on groups or individuals based on race, color, or national origin.  From an employment law perspective, however, federal contractors and grant recipients are additionally bound to comply with Title VII, which prohibits both intentional discrimination and unintentional discrimination that has a disparate impact on protected groups.  As we discuss further in our next article on this subject, the administration is clearly seeking to narrow the scope of Title VII as much as possible with respect to disparate impact theory, but it has a more uphill battle for that initiative.

By Tracey I. Levy