In June, the U.S. Justice Department’s Office of Legal Counsel (OLC) issued an Opinion calling into question the concept of disparate impact liability under federal law. Under Title VII of the Civil Rights Act of 1964 as amended in 1991, disparate impact liability is triggered if a neutral employment practice disproportionately harms a protected class.
The Opinion concluded that certain guidelines maintained by the U.S. Equal Employment Opportunity Commission (EEOC) are unconstitutional because they are grounded in disparate impacts alone without sufficient regard to employer intent.
To be clear, the Opinion is merely an opinion by the OLC; it is neither a judicial finding nor a legislative change, and it binds only the EEOC, which asked for the opinion. Disparate impact is still a viable claim against employers under federal law and under many state laws. While the EEOC under Chair Andrea Lucas will not find merit to or bring such a claim, Plaintiffs’ attorneys still can advance such cases, as can a multitude of state enforcement agencies where disparate impact liability remains alive and well.
A Timeline of Disparate Impact Theory’s Rise and Fall
This past year, agencies across the federal government have taken steps to rein in disparate impact litigation targeted at employers. These efforts began in April 2025, as we previously reported, when President Trump signed Executive Order 14281 (the “EO”) and directed all relevant federal agencies to “eliminate” disparate impact liability in civil rights law enforcement. The EO asserted that disparate impact, as a practice, is “wholly inconsistent” with the Constitution and “undermines our national values” of equal protection.
The EEOC, charged by Congress to enforce federal workplace discrimination laws, moved quickly to implement this mandate. One month after the issuance of the EO, the EEOC dropped any pending disparate impact cases it was pursuing and cut financial backing to any state regulatory agency that brought similar claims.
Late last year, the U.S. Department of Justice (DOJ) also took steps to curtail disparate impact liability enforcement. The DOJ issued updated regulations concerning Title VI of the Civil Rights Act of 1964, which generally applies to entities that receive federal funding. In a press release announcing the changes, then-Attorney General Pam Bondi declared that “decades” of disparate impact liability enforcement would end to prevent those receiving federal dollars from making race-based decisions.
Following suit, in June 2026, the EEOC announced a new National Enforcement Plan (NEP)—which supersedes a prior plan set to expire in 2028—that directs the agency to “prioritize” Title VII disparate treatment liability theories over disparate impact theories. According to the EEOC, disparate treatment—when the employer intentionally treats an employee differently because of a suspect class—is “inherently . . . more egregious” than disparate impact, and, coupled with the EO, justified its determination to stop investigations based on disparate impact.
EEOC Commissioner Kalpana Kotagal, the body’s sole Democrat-appointee, denounced the NEP, emphasizing the rising use of “AI-related tools in employment decisions” that can contain “inherent biases.”
In line with the NEP, however, EEOC Chair Andrea Lucas made a request to the OLC to determine the constitutionality of the EEOC’s long-standing interpretations of Title VII disparate impact liability, which the agency has incorporated into its regulations, reference documents, and its “Uniform Guidelines on Employee Selection Procedures.” The opinion found the interpretations unconstitutional.
The OLC Opinion: Not an Obituary
The Opinion is not an obituary for disparate impact liability, as some have reported. It only discusses the EEOC’s historical interpretations and application of disparate impact and declared those interpretations unconstitutional.
The Opinion states that the “fundamental problem is that disparate-impact liability tends to incent- and even coerce – employers to make race-based decisions to avoid liability or the threat of liability. Relying on Ricci v. DeStefano, 557 U.S. 557 (2009), a case involving an examination provided to firefighters where white firefighters outperformed other racial groups, the OLC notes that, by forcing employers to evaluate racial outcomes and make decisions dependent on those outcomes, disparate impact liability is causing employers to make race-based decisions. The EEOC interpretations, so the opinion concludes, create a “qualified racial-proportionality mandate” that requires employers to “engage in race-based decisionmaking [sic].”
The Opinion recommends the EEOC revise its interpretations to emphasize that: (1) the “business-necessity” defense is a low, passable bar and is simply met when an employer demonstrates that a challenged practice is “rational, convenient, or helpful” to the business; (2) plaintiffs must meet a “robust causality requirement” to prove that only the challenged practice itself, and not other external or internal factors, caused a disparate impact; and (3) plaintiffs must “establish with particular evidence” that the employer can enact an “available alternative practice” that reduces disparate impact while still being “equally effective” in meeting the employer’s “valid business purpose.”
To date, no court has grappled with the OLC’s suggested modified interpretations, nor has Congress amended Title VII, where disparate impact liability against private employers is currently codified. That said, at least for the time being, employers will see an end or a sharp decrease in any disparate impact claims investigated by the EEOC. This will not be the end of disparate impact claims, though, as employees can still, on their own, bring disparate impact claims in federal court.
State-Level Disparate Impact Legislation
A multitude of states have civil rights laws on their books. Many of these state laws permit both employees and state agencies to bring civil actions challenging facially neutral employment practices with allegedly disparate, discriminatory effects.
For example, last December, citing the EO as justification, New York and New Jersey expanded disparate impact liability under their existing employment discrimination laws. Illinois and Maryland passed bills to codify disparate impact liability. And through statutory or decisional law, California, Colorado, Massachusetts, and Minnesota have already had disparate impact liability available to potential plaintiffs.[1]
Final Takeaway
To recap, while the opinion likely will end the EEOC’s pursuit of disparate impact litigation, at least for the duration of Chair Lucas’ term, employers should remember that the law itself has not changed. Indeed, it’s possible that heightened attention to this aspect of civil rights law could trigger a potential uptick in disparate impact claims brought by employees in federal and state courts, as well as by state agencies that enforce disparate impact liability.
Endnotes
* Grady Smith, a Summer Associate—not admitted to practice—in Epstein Becker Green’s Los Angeles office, contributed to this article’s preparation.
[1] Note, this is a non-exhaustive list of states that recognize disparate impact liability.
