In response to a request from the Equal Employment Opportunity Commission (EEOC) Chair Andrea Lucas, the Department of Justice’s (DOJ) Office of Legal Counsel (OLC) on June 9 issued an opinion declaring the EEOC’s current guidance on disparate impact under Title VII of the Civil Rights Act of 1964 to be unconstitutional.
Background
The concept of disparate impact liability—created by the Supreme Court in Griggs v. Duke Power and incorporated into Title VII with the 1991 Civil Rights Act Amendments—has long been controversial because of the perceived clash with the Constitution’s Equal Protection Clause. Former Supreme Court Justice Antonin Scalia, in his concurrence in Ricci v. DeStefano, wrote that the Court would eventually have to confront whether disparate impact provisions of Title VII are consistent with equal protection, while the Court in Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc. said that “serious constitutional questions” would arise if disparate impact liability were based only on statistical disparities.
Using these Supreme Court decisions and the Supreme Court’s recent Voting Rights Act case, Louisiana v. Callais—which held that only intentional racial discrimination in redistricting could be challenged— the OLC opinion states that the fundamental problem with disparate impact is that it “tends to incent—and even coerce—employers to make race-based decisions to avoid liability or the threat of liability.” The opinion then goes on to cite President Trump’s April 2025 Executive Order 14281, “Restoring Equality of Opportunity and Meritocracy,” which rejected the use of disparate impact theory because it “creates a near insurmountable presumption that unlawful discrimination exists” if there are any differences in outcomes in other protected groups.
Standards for Disparate Impact to Avoid Constitutional Challenge
Relying on these Supreme Court decisions, the OLC opinion then sets out three limiting principles to avoid finding Title VII unconstitutional and which would significantly narrow the scope of employer liability based on disparate impact.
(1) Business necessity is low bar: Employers need only show that a challenged practice rationally serves a valid business purpose—that the practice is “reasonable,” “convenient,” or “helpful” in achieving a legitimate end. As a result, workplace requirements and selection procedures, including degree requirements, aptitude tests, and criminal background checks, are presumptively job-related even if the practice results in different outcomes for different categories. Only practices that are “artificial, arbitrary, and unnecessary” with no plausible job-relatedness can create liability under the DOJ’s interpretation of disparate impact.
(2) Claims must satisfy robust causality with specific employment practice: Employees and applicants filing disparate impact claims must demonstrate—at the pleading stage and throughout litigation—the specific hiring practice that directly caused the alleged disparate impact. They cannot rely on statistical disparities alone but must show the particular practice that caused the unequal outcomes.
(3) Claims must identify an equally effective alternative: Finally, an employee or applicant, in addition to showing causation, must also identify an available and equally effective alternative employment practice that would produce less disparate impact. “Effectiveness” must include achieving the employer’s business goals without increasing its costs and administrative burdens. Only an employer’s refusal to adopt an equivalent alternative that doesn’t have a similarly undesirable racial effect allows the inference that the challenged practice is a pretext for discrimination.
What Happens Next
The opinion is directed at the EEOC and is to guide its enforcement of Title VII moving forward. It doesn’t amend or rescind the EEOC’s guidance or law, but as a result of the opinion, the EEOC is likely to undertake rulemaking to conform with its requirements. OLC opinions are binding on federal executive agencies. However, private-sector employees and state enforcement agencies aren’t bound by the OLC opinion and can continue to file disparate impact claims under Title VII.
Takeaways
Employers should continue to comply with federal and state regulations, guidance, and precedent governing disparate impact claims while monitoring these developments closely.
H. Juanita Beecher is an attorney with FortneyScott in Washington, D.C. You can reach her at nbeecher@fortneyscott.com.