Key Highlights
- The U.S. Department of Justice’s Office of Legal Counsel issued an opinion concluding that the Equal Employment Opportunity Commission’s (EEOC) current interpretation of disparate-impact liability under Title VII is unconstitutional because, in DOJ’s view, it allows liability based on disparate effects alone and pressures employers to engage in race-based decision-making.
- The opinion follows the Administration’s broader effort to limit federal disparate-impact enforcement.
- The opinion does not amend Title VII or eliminate private or state-law disparate-impact claims. In recent months, some states have taken action to bolster the viability of disparate-impact claims under state law.
What Is Changing?
On June 9, 2026, DOJ’s Office of Legal Counsel issued an opinion concluding that the EEOC’s disparate-impact guidelines under Title VII violate the Constitution’s Equal Protection Clause. According to the opinion, EEOC’s prior disparate-impact guidance impermissibly pressured employers to engage in racial discrimination by allowing liability based on unequal hiring or promotion outcomes, without regard to the employer’s likely intent. In DOJ’s view, some level of disparities among protected groups is inevitable and the EEOC’s disparate-impact guidance had “the effect of injecting racial considerations into the evaluation of nearly all employment practices.”
Importantly, the opinion does not conclude that every form of disparate-impact liability is invalid. Rather, it interprets Title VII disparate-impact liability narrowly, as a tool for identifying employment practices that reflect a significant likelihood of intentional discrimination. In DOJ’s view, the EEOC’s historical approach went too far by treating disproportionate outcomes as sufficient to create liability without sufficient attention to intent, causation, business necessity and alternative practices.
DOJ Narrows the Federal Disparate-Impact Framework
Disparate-impact liability generally addresses facially neutral employment practices that disproportionately affect members of a protected group. For example, disparate-impact may come into play if an employer used a pre-hiring test to vet job applicants, and one race (or other protected group) passes the test at a rate that creates a statistically significant disparity relative to the pass rates for other races or groups. Even if the test is facially neutral and was adopted for non-discriminatory reasons, disparate impact is a potential avenue for an employee to assert claims against the employer.
The new DOJ opinion seeks to narrow disparate-impact liability by reducing the range of circumstances where disparities between groups will be found to result from unlawful discrimination. First, although Title VII disparate-impact already incorporates a business-necessity defense under which the employer can show that the challenged practice is job-related and serves a valid business purpose, the new DOJ opinion emphasizes that the defense should not be treated as a high bar. DOJ opines that the employer need only show that the challenged practice is rational, convenient or helpful in serving a valid business purpose. Second, DOJ’s opinion argues that plaintiffs must satisfy a robust causation requirement by showing that the specific challenged practice caused the alleged disparate impact and that the impact is not the result of other factors that may be societal and not within the employer’s control. Third, plaintiffs must identify an equally effective alternative practice that would cause less disparate impact.
State-Law Obligations Remain an Important Unresolved Issue
The DOJ opinion creates a potential conflict for employers operating in jurisdictions that recognize disparate-impact liability under state or local law. As we recently reported, New York amended the New York State Human Rights Law to expressly provide that a facially neutral employment practice may violate state law based on its discriminatory effects, even absent proof of discriminatory motive. The New York standard also requires employers to establish job-relatedness and business necessity once a disparate impact is shown and permits an employee to prevail by identifying a less discriminatory alternative.
It remains unclear how DOJ’s constitutional analysis will apply to these state-law standards. The opinion is directed at the EEOC’s interpretation and enforcement of federal Title VII; it does not, by itself, repeal or amend state statutes. Employers may have arguments that the same constitutional concerns identified by DOJ with respect to Title VII would also apply to state laws, but it is unclear how receptive courts, particularly in many of the jurisdictions with higher levels of employment regulation, will be to these arguments. In addition, a related Executive Order issued last year on disparate impact directed the Attorney General to determine whether federal authority preempts state laws that impose disparate-impact liability.
Employers now face competing risks when neutral practices produce potential racial disparities. On one hand, litigation risk from disparate-impact claims may point toward revising those practices. On the other hand, the DOJ opinion suggests that changes motivated by racial outcomes could be viewed as impermissibly race-conscious. Employers now must walk a tightrope between anti-discrimination standards that appear to be at odds.
Why This Matters
The DOJ opinion is another development in the federal government’s broader retreat from disparate-impact enforcement and may reduce the likelihood that the EEOC will pursue federal Title VII claims based primarily on statistical disparities arising from neutral employment practices. While a reduction in EEOC disparate-impact liability would be a positive development for employers, there are still risks from private litigants asserting Title VII disparate-impact claims as well as state laws that may be moving in the opposite direction toward a wider scope of application for disparate impact. It remains to be seen whether DOJ’s reasoning will be persuasive in cases not involving the EEOC or those brought under state law.
