On April 23, President Trump issued an executive order, "Restoring Equality of Opportunity and Meritocracy" (EO), intending to abolish a longstanding liability theory for workplace discrimination claims. Emphasizing the need for a "meritocracy and color-blind society," the EO aims to "eliminate the use of disparate-impact liability in all contexts." This move could significantly impact policy and practice considerations for employers. Below is a summary of the EO and how it may impact your business.
Disparate Treatment v. Disparate Impact Liability
Federal anti-discrimination laws such as Title VI and Title VII of the Civil Rights Act of 1964 have historically imparted liability on businesses under two main theories: disparate treatment and disparate impact. The former is intentional discrimination—treating an employee differently because of their membership in a protected category. The latter is generally unintentional—it occurs when an employer has a facially neutral policy or practice that disproportionately impacts a particular protected category.
For example, if an employer has a minimum height requirement for a job, it would likely have a disparate impact on women (who are statistically shorter than men). Employers have had to be wary of both theories of discrimination, as each provides the risk of liability for a violation of the anti-discrimination laws.
Trump's workplace meritocracy EO essentially revokes prior presidential actions that recognize disparate impact liability in federal law. It also asks agencies with authority over discrimination laws to stop enforcement of disparate impact cases and initiate rulemaking to remove this theory of liability from their regulations.
Executive Branch Enforcement
The EO by itself cannot eliminate statutory and case law precedent. Instead, it requires various entities within the executive branch to do the following:
- All agencies must deprioritize enforcement of disparate impact liability under Title VII and certain subsections of Title VI
- The attorney general (AG) must initiate action to repeal or amend the implementing regulations of Title VI to the extent they contemplate disparate impact liability
- The AG must report to the president all existing federal regulations, guidance, rules, and orders that impose disparate impact liability and detail steps for their amendment or repeal
- The AG must report to the president other laws or decisions, including those at the state level, that impart disparate impact liability and measures to address them
- Various federal agency heads, including the chair of the Equal Employment Opportunity Commission (EEOC), must assess all pending investigations, civil suits, other ongoing matters, consent judgments, and injunctions that rely on disparate impact theory and take "appropriate action" consistent with the EO
In addition to the foregoing actions with respect to current exercises of disparate impact liability, the EO also orders the AG to determine whether any federal authority preempts state authority in this field and whether such state authority has constitutional infirmities, and go after them accordingly. Furthermore, the AG and the EEOC chair are to issue guidance to employers on how to institute an "equal access" system in the workplace.
More Flexibility for Employers
Employers should take note: While many of the practical implications of this EO remain to be seen based on agency action, what this EO likely means is that employers will no longer have to assess their policies or practices for their potential impact on any specific protected category (at least with respect to federal laws). This will lead to more flexibility in establishing policies that suit their workplace needs, including relying more on education, experience, training, and certifications/licensures, even if those criteria may produce unequal results among protected groups.
Indeed, employers may even begin to face new liability for collecting or analyzing statistics about imbalanced outcomes across demographics. Collecting these statistics may have previously been required or considered a best practice to avoid exposure to disparate impact liability. Employers should still be wary of the obligations state and local laws impose, which may still recognize disparate impact liability, especially in the class action context.
Venable will continue to monitor labor and employment-related developments in this new administration. Employers with questions about how this, or any other, EO may impact their current practices should contact the authors of this article or any other attorney in Venable's Labor and Employment Group.