President Donald J. Trump issued an executive order titled “Restoring Equality of Opportunity and Meritocracy.” This order aims to eliminate the use of disparate impact liability in all contexts, emphasizing the importance of treating all citizens equally under the law and promoting a merit-based, colorblind society.
The executive order states that a foundational principle of the United States is equality of opportunity, not equal outcomes. It emphasizes that individuals should be treated based on their merits and efforts, rather than their race, sex, or other immutable characteristics. The order criticizes disparate impact liability for undermining this principle and violating the constitution by creating a presumption of unlawful discrimination based on differences in outcomes among various groups, even in the absence of discriminatory intent, policies, or practices, and by requiring individuals and businesses to consider race and engage in racial balancing to avoid liability.
The order establishes that it is the policy of the United States to eliminate disparate impact liability to the maximum extent possible, aligning with constitutional principles and federal civil rights laws. It revokes specific presidential approvals of regulations promulgated under Title VI of the Civil Rights Act that had previously supported disparate impact liability. Additionally, the order directs all federal agencies to deprioritize the enforcement of statutes and regulations to the extent they include disparate impact liability, such as Title VII of the Civil Rights Act, addressing unlawful employment practices, and regulations prohibiting discrimination in connection with federally assisted programs.
Further, the order mandates that the Attorney General and Chair of the Equal Employment Opportunity Commission conduct a review of all pending investigations, civil suits, and ongoing matters that rely on disparate impact liability under every federal civil rights law within their jurisdiction. It also mandates that the Attorney General, Secretary of Housing and Urban Development, Director of the Consumer Financial Protection Bureau (CFPB or Bureau), Chair of the Federal Trade Commission, and other agency heads conduct a similar review with respect to the enforcement of the Equal Credit Opportunity Act, Fair Housing Act, and laws prohibiting unfair, deceptive, or abusive acts and practices. Appropriate actions must be taken within 45 days to align with the policy of the order. Federal agencies must also review existing consent orders and injunctions that rely on disparate impact theories of liability and take appropriate action.
In addition, the Attorney General is tasked with initiating actions to repeal or amend regulations implementing Title VI of the Civil Rights Act that contemplate disparate impact liability. Within 30 days, the Attorney General, in coordination with other agency heads, must report on existing regulations, guidance, rules, orders, or other laws or decisions that involve disparate impact liability and provide steps to amend, repeal, or otherwise address any disparate impact concerns.
The Attorney General, in coordination with other agencies, will further determine whether federal authorities preempt state laws that impose disparate impact liability and take necessary measures to address those laws. Additionally, guidance will be issued to employers on promoting equal access to employment.
Our Take
This executive order aligns with the CFPB’s 2025 supervision and enforcement priorities, which, as discussed here, explicitly state that the Bureau will not pursue disparate impact theories of discrimination. This is consistent with the executive order’s aim to eliminate disparate impact liability at both the federal and state level. It remains to be seen how other federal agencies (notably, the federal banking regulators) will react to this order, but given the all-encompassing mandates within the order, we expect to see major shifts in how federal agencies approach equal employment and fair lending matters, among other areas.
As always, we will continue to monitor these developments and provide updates on how they impact the regulatory landscape.
