President Donald Trump recently ordered federal agencies not to enforce laws that prohibit policies and practices with discriminatory impacts that are often unintended. Curbing so-called “disparate impact” liability, which is common in employment-related cases, removes a critical tool the government has used for decades to also police discrimination in housing, education, lending and other areas.
WHAT IS DISPARATE IMPACT LIABILITY?
Numerous federal laws, some dating to the years after the Civil War, prohibit discrimination based on race, sex, religion and other protected traits. Courts long understood discrimination to be an intentional act, but that began to change after the adoption of the landmark Civil Rights Act in 1964.
The U.S. Supreme Court created a new path to hold employers liable for discrimination in the 1971 case Griggs v. Duke Power. The court said that otherwise neutral employment practices can violate the Civil Rights Act when they disproportionately affect a protected group and are not demonstrably related to job performance.
Congress in 1991 amended the Civil Rights Act to explicitly prohibit the practices covered by the Supreme Court decision. Many experts have credited those changes for helping to spur companies to track the impact of their employment policies on protected groups, a now commonplace practice.
WHY DOES TRUMP OPPOSE DISPARATE IMPACT LIABILITY?
Trump in an April 23 executive order said disparate impact litigation is one of the tools used by a “pernicious movement” to replace merit-based decision making with a focus on diversity.
The Republican president has been a vocal critic of workplace diversity, equity and inclusion policies and has launched an aggressive effort to eradicate them from the government and the private sector.
During Trump’s first term, some federal agencies considered rolling back disparate impact regulations. The U.S. Department of Housing and Urban Development in 2020 eliminated Obama-era rules barring housing practices with disparate impacts on protected groups, but that was paused by a court and later reversed by the Biden administration.
Trump in April’s executive order said the threat of disparate impact litigation prevents businesses from making decisions based on merit and skill, and that the legal theory wrongly presumes that unlawful discrimination exists “where there are any differences in outcomes” among different groups.
