Title VII of the Civil Rights Act and other U.S. anti-discrimination laws have traditionally relied on two key theories of liability – disparate impact and disparate treatment.

An April 23, 2025 Executive Order issued by President Trump effectively eliminates the disparate impact theory in federal employment cases.

Disparate Impact vs. Disparate Treatment Theories

Disparate impact discrimination occurs when a facially neutral workplace policy or practice disproportionately harms a protected group.

This theory of liability can find that discrimination occurred even if the employer did not intend to discriminate. Disparate impact liability often relies on statistical outcomes that show a disproportionately negative impact on members of a protected class, and is commonly seen in cases involving hiring practices, promotions, or testing criteria.

Example of Disparate Impact: An employer implements a minimum height requirement in its hiring process, stating that it is necessary for safety reasons. However, statistical analysis shows that this requirement disproportionately excludes women and certain ethnic groups with statistically shorter average stature.

Disparate treatment, on the other hand, is the more common form of discrimination alleged in employment discrimination cases. Disparate treatment occurs when an employer treats someone differently because of their protected class.

Example of Disparate Treatment: A manager consistently promotes younger employees over older candidates, based solely on their age, even when the older candidates are better qualified with better performance reviews.

The Executive Order: Key Takeaways

President Trump’s April 23, 2025, Executive Order (EO) Restoring Equality of Opportunity and Meritocracy eliminates disparate impact liability in federal employment policy and regulations, arguing that the disparate impact theory forces race-conscious practices that compel employers to consider demographics over merit.

This approach is consistent with the Trump administration’s broader efforts to reshape federal anti-discrimination and DEI policies.

All employment attorneys should be aware of these key takeaways:

• Although disparate impact liability has been codified in Title VII as part of the Civil Rights Act of 1991 (42 U.S.C. 200e-2(K)), the EO states that it is now “the policy of the United States to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible to avoid violating the Constitution, Federal civil rights laws, and basic American ideals.”

• The EO revokes prior presidential approvals of DOJ regulations under Title VII to the extent that they impose disparate impact liability.

• The EO orders the attorney general and chair of the EEOC to assess, within 45 days, all pending investigations, civil suits, or positions in ongoing matters under federal civil rights laws that rely on a disparate impact theory of liability and take actions consistent with the new policy.

• The EO directs all agencies to evaluate, within 90 days, all existing consent judgments and permanent injunctions that rely on disparate impact theories and take appropriate actions.

• The EO directs the attorney general to determine whether federal law preempts state laws that impose disparate impact theories of liability and take appropriate actions.

Impacts

Because the EO directs the attorney general to determine whether this change to federal anti-discrimination law preempts state laws that allow for the same disparate impact theory of liability, this EO may lead to future legal challenges and changes at the state level.

Because the EO directs agencies to deprioritize and amend regulations that impose disparate impact liability, this may reduce federal enforcement actions that are based solely on statistical discrepancies.

This EO is part of a broader effort by the Trump administration to emphasize merit-based hiring and promotion practices and policies. Although this EO could face legal challenges, it is a good time for employers to review their internal policies and practices to ensure that they focus on employees’ individual qualifications and merit.

This article was originally published on the State Bar of Wisconsin’s Labor & Employment Law Section Blog. Visit the State Bar sections or the Labor & Employment Law Section webpages to learn more about the benefits of section membership.