On June 9, 2026, the Department of Justice (DOJ) issued a formal opinion to the Equal Employment Opportunity Commission (EEOC), concluding that EEOC’s guidelines regarding disparate-impact liability under Title VII of the Civil Rights Act are unconstitutional. While the opinion does not eliminate Title VII’s disparate-impact provisions, it may relieve employer-liability in certain workplace hiring and selection procedures.
The opinion seeks to implement Executive Order No. 14281, “Restoring Equality of Opportunity and Meritocracy.” The Executive Order, issued on April 23, 225, established a policy to “eliminate the use of disparate-impact liability in all contexts to the maximum degree possible.”
Below, KingSpry’s Employment LawChair, Avery E. Smith, Esq., outlines DOJ’s formal opinion and provides practical guidance for employers navigating this development.
What is Disparate-Impact Liability?
Disparate impact liability is a legal concept through which employers can be held liable for facially neutral policies that, even without discriminatory intent, cause disproportionate harm to a protected class. This form of liability differs from intentional discrimination, because it focuses on the outcome rather than the intent of the actor.
In its opinion, DOJ analyzed “whether the disparate impact provisions in Title VII . . . are constitutional as currently interpreted and applied, particularly by the EEOC in its interpretative rules and guidance documents.” Its answer: No.
Legal Standard
The Equal Protection Clause of the Fourteenth Amendment guarantees that no state will “deny any person within its jurisdiction the equal protection of the laws.” The Supreme Court has explained that the “core purpose” of the Equal Protection Clause is to “do away with all governmentally imposed discrimination based on race.” DOJ clarified, however, that the Clause does not guarantee “equal outcomes.” Accordingly, “[a] law that creates an unintentional disparate impact . . . does not violate the Constitution’s equal-protection guarantee.”
Title VII also guarantees equal treatment, prohibiting employers, employment agencies, unions, and training programs from discriminating in employment against any individual because of their “race, color, religion, sex, or national origin.” DOJ emphasized that this prohibition focuses on actions taken “because of” or “based on” an individual’s protected class, requiring the discrimination to be intentional.
The EEOC took its interpretation of Title VII further, providing that it is an unlawful employment practice “to fail or refuse to hire, to discharge or to compensate unevenly on facially neutral criteria which prove to have a demonstrable racial effect without a clear and convincing business motive.” In other words, employers could be held liable for facially neutral policies that have a disparate impact on a protected class, regardless of intent. DOJ explained that these guidelines contradict Title VII, which specifically requires an employer to have discriminatory intent to be found liable for disparate-impact discrimination.
Constitutional Concerns
DOJ highlighted that Title VII disparate-impact liability has raised serious constitutional concerns since its inception. The “fundamental problem” with disparate-impact liability is that it tends to “incent—or even coerce—employers to make race-based decisions to avoid liability or the threat of liability.”
For example, in Ricci v. DeStafano, a fire department adopted a facially neutral examination to determine which firefighters would be considered for promotion. White firefighters outperformed others on the exam. DOJ opined that “the fire department found itself in an impossible situation,” because it could either (A) keep the test results and potentially face disparate-impact liability or (B) disregard the results and deny promotions to deserving candidates based solely on “the statistical racial disparity.” While disparate-impact liability serves to prevent discrimination, it often requires employers to evaluate racial outcomes and make race-based decisions. This process essentially allows employers to indirectly engage in unlawful racial discrimination.
DOJ concluded that Title VII, as currently interpreted by the EEOC, is unconstitutional and enumerated three (3) limiting principles on disparate-impact liability.
(1) Business Necessity Defense
Title VII requires employers to demonstrate that their challenged policies are related to the job and necessary for their business. DOJ explained that some workplace practices are presumptively job-related, including background checks, knowledge-based tests, SAT scores, and high school graduation requirements. Under the “business necessity defense,” defendant-employers are provided “leeway to state and explain the valid interest served by their policies.” This is a low burden, requiring an employer to demonstrate only that the challenged practice is “rational, convenient, or helpful for serving a valid business purpose.” For a plaintiff-employee, however, the bar is high. A disparate-impact claim will stand only when the challenged employment practice establishes “artificial, arbitrary, and unnecessary barriers.”
(2) Causality Requirement
Next, the opinion states that a disparate-impact claim must satisfy a “robust causality requirement.” This means a plaintiff-employee must plead the specific employment practice challenged and plausibly show that the practice causes a disparate impact.
(3) Plaintiff Must Offer Viable Alternative
Finally, a plaintiff-employee must offer a viable alternative to the challenged practice that “accomplishes the employer’s legitimate goals just as well.” This requires the plaintiff to (A) offer a proposed alternative, (B) prove that the alternative would have a less disparate impact, and (C) prove that the alternative would be equally effective.
What This Means for Covered Employers
Title VII applies to employers with at least fifteen (15) employees, including employers in the public and private sector, the federal government, employment agencies, and labor unions. DOJ concluded that EEOC opinions, interpretative rules, and guidance documents implementing disparate-impact liability violate Title VII and the Constitution. The opinion itself, however, does not amend or rescind any EEOC guidelines or law. Covered employers should monitor the situation and expect the EEOC to issue revised guidance in accordance with DOJ’s opinion.
While the opinion reflects an employer-friendly stance on disparate-impact discrimination, employers are encouraged to refrain from rolling back existing compliance efforts at this time, as the opinion may be tested in Federal court. Moreover, employers must be cognizant of other Federal, State, and local laws prohibiting discrimination and providing a mechanism for disparate-impact discrimination claims.
