EEOC to Close Investigations of Disparate Impact Discrimination

The U.S. Equal Employment Opportunity Commission will close almost all pending charges based solely on allegations of disparate impact discrimination by September 30, 2025, according to an internal memorandum obtained by Bloomberg Law. The agency is expected to issue right-to-sue letters to charging parties whose charges will be closed, allowing them to proceed on their own in federal court. While it is not clear whether it was explicitly stated in the memo, it appears reasonably certain the agency itself will not file any litigation premised on disparate impact theory going forward.

The memo reportedly allows for limited exceptions subject to approval by EEOC leadership. Charges that allege both disparate impact and disparate treatment theories will remain open, although agency staff have been directed to investigate only the disparate treatment claims. The move follows on the administration’s April 2025 executive order directing all federal agencies to cease using disparate impact theory under federal civil rights laws, including Title VII of the Civil Rights Act of 1964 (addressing employment discrimination) and Title VI (addressing discrimination in education). 

By way of background, disparate impact is a theory of liability under civil rights laws in which a facially neutral practice (for example, a credit check or aptitude test to screen job applicants) has a disproportionately adverse effect on a protected class of individuals. Unlike disparate treatment liability, which requires proof of intentional discrimination, disparate impact liability arises from the use of a neutral practice and requires no showing of intent to discriminate.

Disparate impact was first recognized as a viable theory of discrimination by the U.S. Supreme Court in Griggs v. Duke Power Company, 401 U.S. 424 (1971). In Griggs, the Court addressed an employer’s requirement that to be employed in its highest-paying departments, an employee had to have a high school diploma or pass tests of mechanical aptitude and IQ. White employees were almost 10 times more likely than Black employees to meet these requirements. The Court held that absent a showing of business necessity, the use of a test that disproportionately screens out individuals in a protected category is unlawful.

 In 1991, via the Civil Rights Act of 1991, Congress codified disparate impact liability in Section 703(k) of Title VII. Under Section 703(k), an individual has the burden of proof to show that a particular employment practice has a disparate impact (usually by use of statistical evidence). The burden then shifts to the employer to show that the practice is “job related for the position in question and consistent with business necessity.” If the employer is able to prove that the practice is justified by business reasons, a plaintiff may still prevail if it can show an equally effective alternative employment practice that does not have an adverse impact and which the employer refused to adopt. That law remains in effect as an executive order may impact what is prioritized by a federal agency, but cannot “unwrite” a law written by Congress.

While it seems clear that the EEOC and other federal agencies (such as the Department of Education) will no longer pursue investigations or bring litigation based on disparate impact theory, employers are cautioned that disparate impact liability is a viable theory of discrimination under Title VII. While plaintiffs must bring a charge alleging such discrimination to the EEOC in the first instance, they ultimately are able to bring private suit in federal court absent any involvement by the EEOC. Moreover, many states impose laws establishing disparate impact liability under their state non-discrimination laws. Employers facing challenges to employment practices or charges of discrimination alleging disparate impact liability are advised to consult with counsel.