Executive Order Aims to Eliminate Disparate-Impact Liability
On April 23, 2025, the White House issued an Executive Order from United States President Donald J. Trump entitled “Restoring Equality of Opportunity and Meritocracy” which aims 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.”
“Disparate-impact liability all but requires individuals and businesses to consider race and engage in racial balancing to avoid potentially crippling legal liability. It not only undermines our national values, but also runs contrary to equal protection under the law and, therefore, violates our Constitution,” according to the “Purpose” section of the Executive Order.
“On a practical level, disparate-impact liability has hindered businesses from making hiring and other employment decisions based on merit and skill, their needs, or the needs of their customers because of the specter that such a process might lead to disparate outcomes, and thus disparate-impact lawsuits.” As a result, the Executive Order asks for the following review:
- Within 45 days of the date of this order, the Attorney General and the Chair of the Equal Employment Opportunity Commission shall assess all pending investigations, civil suits, or positions taken in ongoing matters under every Federal civil rights law within their respective jurisdictions, including Title VII of the Civil Rights Act of 1964, that rely on a theory of disparate-impact liability, and shall take appropriate action with respect to such matters consistent with the policy of this order.
- Within 45 days of the date of this order, the Attorney General, the Secretary of Housing and Urban Development, the Director of the Consumer Financial Protection Bureau, the Chair of the Federal Trade Commission, and the heads of other agencies responsible for enforcement of the Equal Credit Opportunity Act (Public Law 93-495), Title VIII of the Civil Rights Act of 1964 (the Fair Housing Act (Public Law 90-284, as amended)), or laws prohibiting unfair, deceptive, or abusive acts or practices shall evaluate all pending proceedings that rely on theories of disparate-impact liability and take appropriate action with respect to such matters consistent with the policy of this order.
- Within 90 days of the date of this order, all agencies shall evaluate existing consent judgments and permanent injunctions that rely on theories of disparate-impact liability and take appropriate action with respect to such matters consistent with the policy of this order.
The Executive Order states that disparate-impact liability makes it difficult “to use bona fide job-oriented evaluations when recruiting, which prevents job seekers from being paired with jobs to which their skills are most suited… Because of disparate-impact liability, employers cannot act in the best interests of the job applicant, the employer, and the American public.”
Disparate-impact liability “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.”
As for future agency action, the Executive Order states that the Attorney General “shall determine whether any Federal authorities preempt State laws, regulations, policies, or practices that impose disparate-impact liability” and that the Attorney General and the EEOC Chair “shall jointly formulate and issue guidance or technical assistance to employers.”
The EEOC, Title VII, and “Disparate Impact”
The U.S. Equal Employment Opportunity Commission (EEOC) – which is responsible for enforcing federal laws prohibiting employment discrimination – enforces Title VII of the Civil Rights Act of 1964 (Title VII), which makes it unlawful for an employer to discriminate against a job applicant or an employee because of Race, Color, Religion, Sex, or National Origin. Title VII states:
- An unlawful employment practice based on disparate impact is established… if a complaining party demonstrates that an employer uses a particular employment practice that causes a disparate impact on the basis of race, color, religion, sex, or national origin and the respondent fails to demonstrate that the challenged practice is job related for the position in question and consistent with business necessity.
In April 2012, the EEOC issued “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions under Title VII of the Civil Rights Act” to address Title VII’s application to the use of criminal records by employers in employment decisions. The Guidance includes information about Disparate Impact Discrimination and Criminal Records.
ClearStar Helps Employers Comply with Background Screening Laws
ClearStar – a global background screening company that has provided services to employers for over 30 years – offers employers a real-time compliance solution. ClearStar’s Assured Compliance® program manages local, state, and federal notice, disclosure, consent, and adverse action requirements for job candidates. Features and benefits include:
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- Updated as Laws Change: Compliance with local, state, and federal laws is a constantly changing landscape that can be challenging. ClearStar publishes a monthly compliance update and adapts our technology in response to regulatory and legislative changes.
- Strong and Clear Audit Trail: A transparent process is important. Candidates can access a copy of their specific notices, disclosures, and the consent they signed. This also creates a reliable audit trail for employers.
- ClearStar is Global: ClearStar’s technology supports candidates who have lived or worked outside of the United States.
A founding and accredited member of the Professional Background Screening Association (PBSA), ClearStar has provided innovative background screening solutions to the Human Capital Management (HCM) industry from its corporate offices in Alpharetta, Georgia, since 1995 and is celebrating the company’s 30th anniversary in 2025. To learn more, contact ClearStar.
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Thomas Ahearn - Digital Content Editor
Thomas Ahearn is a Digital Content Editor at ClearStar, a leading Human Resources technology company specializing in background checks, drug testing, and occupational health screening. He writes about a variety of topics in the background screening industry including Artificial Intelligence (AI), "Ban the Box," class action lawsuits, credit reports, criminal records, drug testing, Equal Employment Opportunity Commission (EEOC), Fair Credit Reporting Act (FCRA), identity theft, privacy, social media screening, and workplace violence.
At ClearStar, we are committed to your success. An important part of your employment screening program involves compliance with various laws and regulations, which is why we are providing information regarding screening requirements in certain countries, region, etc. While we are happy to provide you with this information, it is your responsibility to comply with applicable laws and to understand how such information pertains to your employment screening program. The foregoing information is not offered as legal advice but is instead offered for informational purposes. ClearStar is not a law firm and does not offer legal advice and this communication does not form an attorney client relationship. The foregoing information is therefore not intended as a substitute for the legal advice of a lawyer knowledgeable of the user’s individual circumstances or to provide legal advice. ClearStar makes no assurances regarding the accuracy, completeness, or utility of the information contained in this publication. Legislative, regulatory and case law developments regularly impact on general research and this area is evolving rapidly. ClearStar expressly disclaim any warranties or responsibility or damages associated with or arising out of the information provided herein.
