White House Executive Order Eliminates Disparate Impact Discrimination Enforcement

On April 28, 2025, the White House issued an Executive Order essentially eliminating the enforcement of disparate impact discrimination by government agencies.

Two Forms of Discrimination

Discrimination, as a matter of law, comes in two forms: Disparate Treatment and Disparate Impact. Disparate Treatment occurs when an employer intentionally treats employees differently based on protected characteristics like race, gender, religion, or age. Denying a promotion to a qualified female candidate while a less qualified male candidate is promoted is an example.

Disparate Impact involves a neutral policy or practice, seemingly fair on its face, that has a disproportionately negative effect on a protected group, such as a particular race or gender. The theory looks to the result the employment standard produces rather than the intention of the employer. For example, a policy requiring criminal background checks for all new hires can disproportionately affect applicants on the basis of race or ethnicity. Similarly, an "English-only" rule in the workplace can lead to a disparate impact claim if the rule disproportionately affects employees based on their ethnicity or race.

In a landmark disparate impact case involving the West Haven Fire Department, the United States Supreme Court interpreted Title VII of the Civil Rights Act to prohibit the use of certain employment tests which had a "disparate impact" on members of groups protected under the statute, while bearing no manifest relationship to the employment in question. Once an employment standard is challenged as discriminatory, the employer must show that the standard being used is “job related and consistent with business necessity.” 

What the Executive Order Does and Does Not Do

The Executive Order states that it will “eliminate the use of disparate-impact liability in all contexts.” However, the Executive Order cannot change the existing law authorizing claims for disparate impact liability; that change must be addressed through Congress. The Executive Order is binding on federal agencies including the EEOC, instructing them not to pursue administrative claims based on disparate impact liability.

The Executive Order also requires within 45 days a review of any pending federal investigations, civil suits, injunctions, and positions taken in ongoing cases to ensure they are consistent with the new Order. Note that should a case be dismissed by this review, it may nonetheless be able to be heard by a Court.

Finally, the Executive Order instructs the Attorney General to repeal or amend regulations that authorize disparate impact liability based on race, color, and national origin discrimination under Title VI of the Civil Rights Act of 1964 (for institutions that receive federal financial assistance). Similarly, the Executive Order states that the Attorney General should try to curtail any disparate impact laws at the state level, including assessing whether arguments can be made that state laws are preempted by federal law or otherwise violate the Constitution.

What Does This Mean to Employers?

Preventing the EEOC from pursuing disparate impact cases may have a pronounced practical effect. While a current or former employee may still file a lawsuit under the theory of disparate impact, the cost of bringing a lawsuit tends to weed-out cases that could otherwise have been brought to the EEOC for free. The Executive Order may also bolster the number of cases being brought to state agencies, such as the Connecticut Commission on Human Rights and Opportunities or the Massachusetts Commission Against Discrimination, where the disparate impact theory remains unchanged. Finally, the elimination of the disparate impact theory may in the future lead to a resurgence in a number of employment practices, such as employment testing, degree requirements, and the use of arrest and conviction records in the employment process.

In sum, with this Executive Order, employers can expect to face less scrutiny from the EEOC of their policies and practices based on their alleged disparate impact. State law claims based on a disparate impact theory remain in effect.

We will continue to monitor and report on new developments in this area as further guidance is issued by the administration.

E-Verify Begins Notifying Employers About Employment Authorization Revocations Despite Federal Court Injunction

As of April 23, 2025, E-Verify is now notifying participating employers via Case Alerts when the Department of Homeland Security (DHS) revokes an employee’s Employment Authorization Document (EAD). E-Verify has been sending emails to its account holders that it says have employees whose EADs have recently been revoked by DHS and informing them that the E-Verify cases will be added to their Case Alerts under Cases with Expiring Documents in E-Verify.

In its communication, E-Verify explains that DHS recently sent direct notifications to certain individuals who were paroled into the United States that DHS had terminated their parole and revoked their parole-based EADs.

The revocation notifications, however, may conflict with a federal court order staying the authority of DHS to revoke parole.

Background

You may recall from our alert last month that the Biden Administration had provided humanitarian parole to around 500,000 people from Cuba, Haiti, Nicaragua, and Venezuela. The parole program, “CHNV Parole,” permitted these immigrants to stay in the U.S. for two years with work permits, provided they met certain conditions.

The Trump White House revoked CHNV Parole on March 25, 2025, with the revocation set to take effect on April 24, 2025, and began sending letters to individuals with revoked parole indicating they needed to leave the country immediately. However, on April 14, 2025, a federal district court judge blocked revocation of the CHNV Parole.

Pending further litigation, the federal district judge’s order resulted in the following:

• Individuals paroled into the United States pursuant to the CHNV parole programs may remain in the United States through their originally stated parole end date.

• Employment Authorization Documents (EADs) issued to individuals admitted under the CHNV parole programs will remain valid through the expiration date listed on the EAD.

• Individuals seeking to remain in the United States past the expiration of their parole periods must seek an alternative immigration status to remain in the United States.

E-Verify Guidance Directs Employers to Re-Verify Authorization to Work

Despite the court order staying revocation of unexpired EADs, it would appear DHS is nonetheless proceeding as though CHNV Parole has been revoked. Guidance issued by E-Verify on April 23, 2025, states employers must follow-up on all case alerts in E-Verify and reverify each employee on Form I-9 Supplement B if their EAD was revoked. 

The Guidance states the employee may still be employment authorized based on another status or provision of law and may provide other acceptable Form I-9 documentation to demonstrate employment authorization. In other words, employees will need to provide something other than the Employment Authorization Document they received through CHNV Parole to prove authorization to work.

District Court Injunction Remains in Effect, Conflicts with E-Verify Notifications

On May 5, 2025, the U.S. Court of Appeals for the First Circuit denied a DHS motion which sought to stay the Massachusetts Federal District Court injunction while DHS appealed the ruling. That motion was denied.

On May 8th, DHS filed an emergency appeal to the U.S. Supreme Court seeking a stay from that Court instead, as the administration has done in other cases. The Supreme Court could grant a stay, deny a stay, or hold an argument on the stay request. Regardless of what SCOTUS does or does not do, however, the merits of the case still have to be briefed and decided in the First Circuit.

What this Means for Employers

Unless and until the district court’s ruling is stayed or reversed, the duration of a CHNV beneficiary’s parole and any associated employment authorization remains in effect. Employers who receive Case Alert notifications through E-Verify are advised to consult counsel on how to proceed in light of the court’s ruling.

EEOC Component-1 Collection Data Tentatively Set to Begin May 20th

The 2024 EEO-1 Component 1 reporting period is expected to open on May 20, 2025, and close on June 24, 2025, pending approval of the Instruction Booklet that accompanies the report. The 2024 report will cover employee data from the payroll period between October 1, 2024, through December 31, 2024. These reporting dates remain tentative as OIRA must approve the booklet, which can take 30-60 days from the date of submission. Final dates will be posted on the EEO-1 reporting page.

The EEO-1 Component 1 report, also known as the Employer Information Report, is a mandatory annual data collection conducted by the EEOC. The reporting requirement applies to:

• Private sector employers with 100 or more employees, and

• Federal government contractors and first-tier subcontractors with 50 or more employees and at least $50,000 in contracts.

Employers subject to EEO-1 reporting must report data about their workforce, including job category and the sex and race or ethnicity of their employees.