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The EEOC pursued “disparate impact” discrimination claims for over five decades. As of April 23, 2025, that has changed: The EEOC will no longer bring these cases. In this article, we explain this 180-degree shift.
At Gardner Employment Law, we represent executives, physicians and other professionals navigating complex issues at work. Here’s what you need to know.
What Are the Two Theories of Discrimination?
Disparate treatment and disparate impact are the two theories of discrimination. Here’s what those terms mean:
- Disparate treatment requires showing intent: the employer intentionally discriminated.
- Disparate impact focuses on results: a policy which may be neutral on its face still disproportionately harms a protected group when put into action, even without intent.
For executives, this distinction is critical. It is next to impossible to prove intent at the C-suite level. Boards and compensation committees often justify decisions as “market-based.” Disparate impact has allowed leaders to challenge unfair outcomes when intent couldn’t be shown. Following are illustrations of the two theories:
| Claim Type | Definition | Executive Example |
| Disparate Treatment | Intentional discrimination based on protected status. | A board offers a lower package to a woman CEO than a male peer who is less qualified. |
| Disparate Impact | Neutral policies with unequal effects, regardless of intent. | Compensation tied to prior discriminatory salary, locking in historic pay gaps. |
How Does the Executive Order Change Enforcement of Disparate Impact Claims?
On April 23, 2025, the President issued an executive order entitled, “Restoring Equality of Opportunity and Meritocracy,” and specifically directed the EEOC to stop filing disparate impact cases. The President’s Executive Order
- Revokes certain presidential actions that approve the disparate impact theory of liability.
- Orders all federal agencies to “deprioritize enforcement of all statutes and regulations” that “impose” disparate impact liability (notably including by its terms “other laws or decisions, including at the State level, that impose disparate impact liability”).
- Directs the U.S. attorney general to repeal or amend Title VI regulations that contemplate disparate impact liability (Title VI of the Civil Rights Act of 1964 protects every person in the U.S. from discrimination based on race, color, or national origin in programs or activities receiving federal financial assistance).
- Requires the U.S. attorney general and the chair of the EEOC to review all pending investigations and suits under federal civil rights law that rely on a theory of disparate impact liability, and “take appropriate action with respect to such matters consistent with the policy” of the executive order, i.e. to cease enforcement of a disparate impact claims for liability.
- Instructs the U.S. attorney general and chair of the EEOC to formulate and issue guidance to employers regarding ways to promote equal access to employment.
The executive order cannot and does not change or overrule state or federal law or Supreme Court precedent. However, it does indicate the Trump Administration’s enforcement priorities in employment cases, at least for the foreseeable future.
Here’s what that means in practice:
| Before the executive order | After the executive order |
| EEOC brought class-wide disparate impact claims using major resources allocated by Congress. | EEOC will no longer pursue any disparate impact claims. |
| Companies faced real regulatory risk for unfair pay practices with demonstrated unfair effects. | EEOC’s focus shifts away from companies. |
| Executives had federal backing to challenge systemic pay inequities. | Executives must rely on private suits, which are costlier and harder to win. |
Without EEOC’s involvement, employers may feel freer to use broad pay practices – such as unequal salary history or rigid pay bands – knowing they face less federal scrutiny.
How Does The Loss of Disparate Impact Claims Affect Executives Going Forward?
Executives now face higher hurdles in proving pay inequity.
- Less leverage in negotiations: Without the possibility of an EEOC investigation, boards may ignore questionable pay practices.
- Higher costs to challenge inequities: Private litigation is still possible, but expensive and slower.
- Persistent systemic gaps: Policies that disadvantage leaders in a protected class may continue unchecked, since intent is so difficult to prove.
Now, executives must be more proactive. Review contract wording carefully. Act strategically when negotiating terms of your contract. And more important than ever, seek legal advice from an expert in this area of the law.
Bottom Line
The EEOC’s retreat from disparate impact enforcement reshapes the pay equity landscape. This means fewer protections, diminished bargaining power, and tougher battles ahead.
At Gardner Employment Law, we work with professionals to anticipate these shifts, negotiate effectively, and safeguard both their compensation and reputation. We’re in your corner.