EEOC Disparate Impact Shift: What's at Stake

What employers should know about key developments this week:

EEOC’s New Direction: The Equal Employment Opportunity Commission (EEOC) has scrapped its two-year-old enforcement priorities and rescinded 40-year-old affirmative action guidance in favor of a federal strategy that deprioritizes disparate impact liability and focuses enforcement on disparate treatment claims.
State-Level Backlash: Multiple states—including California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, New Jersey, and New York—have expanded or maintained disparate impact liability in their civil rights laws, creating direct conflict with federal EEOC priorities.
AI and Automated Hiring at Risk: The divergence between federal and state regulators leaves employers uncertain about compliance when using facially neutral employment technologies, including artificial intelligence (AI)-driven hiring tools and standardized testing validation.

In this episode of Employment Law This Week^®, Epstein Becker Green attorney Deborah DeHart Cannavino discusses the EEOC’s shift in focus from disparate impact to disparate treatment enforcement and what it means for multistate employers navigating a regulatory patchwork.

Beyond the EEOC: The Widening Divide in Disparate Impact Enforcement
Play
July 15, 2026

Transcript

[00:00:03] George Whipple: Welcome to Employment Law This Week. I’m George Whipple. The EEOC is aligning its enforcement priorities with the administration’s policies. Today on the show, we discuss what that means for employers. June was a busy month for the EEOC. The agency announced it was scrapping its enforcement priorities two years early in favor of a new strategic plan. Forty-year-old guidance on affirmative action was also rescinded, and the agency has indicated its intent to rescind the Uniform Guidelines on Employee Selection Procedures. On request from EEOC Chair Andrea Lucas, the Justice Department opined that the agency’s guidelines on disparate impact, including the EEOC’s Uniform Guidelines, are unconstitutional. Here’s Epstein Becker Green’s Debbie Cannavino with more on that opinion.

[00:01:04] Deborah Cannavino: The US Department of Justice Office of the Legal Counsel issued an opinion calling into question the disparate impact theory. The opinion recommended the EEOC revise its interpretations on the basis that they embrace an unconstitutional reading of Title VII, as they contemplate liability based on disproportionately adverse effects alone without regard to an employer's intent.

[00:01:33] George Whipple: Collectively, the EEOC’s recent actions indicate a clear shift in focus from disparate impact to disparate treatment. Disparate treatment occurs when an employer alters the terms and conditions of employment due to an employee’s protected characteristics. Disparate impact, on the other hand, is when a facially neutral policy has an adverse impact on a protected group. Debbie, given these changes at the EEOC, do employers need to consider disparate impact at all anymore when making employment decisions?

[00:02:10] Deborah Cannavino: Disparate impact liability is still a viable claim against employers under federal law and under many state laws. While the EEOC under the current chair will likely not find merit to or bring such claims, plaintiffs' attorneys still can, and a multitude of state enforcement agencies can bring claims where disparate impact liability remains alive and well. Not only can employees bring disparate impact claims in federal court, but multiple states have civil rights laws on their books that permit both employees and state agencies to bring civil actions challenging facially neutral employment practices with allegedly disparate discriminatory effect. Last December, citing the executive order as justification, New York and New Jersey expanded disparate impact liability to their existing employment discrimination laws. Illinois passed a law to codify disparate impact liability. And based upon statutory or decisional law, other states, California, Colorado, Massachusetts, Connecticut, and Minnesota, already had disparate impact liability available to potential plaintiffs.

[00:03:21] George Whipple: While the EEOC actions may not have changed the equation for employers when it comes to disparate impact, they do create uncertainty. Debbie points out, for example, that, under the uniform guidelines, employers can validate standardized tests that they administer to employees and prospective employees. If the guidelines are rescinded as proposed, this could remove employer validation safe harbor for employment tests. And it remains to be seen how the push and pull between state and federal regulators will impact emerging, facially neutral technologies, such as automated employment decision technology. Thanks to Debbie. And thank you for watching. We’ll see you next time.

In Case You Missed It

New York Legislation Watch: Five Bills Employers Should Have on Their Radar, Workforce Bulletin

Connecticut Private Employers: New Workplace Rules Take Effect October 1, Epstein Becker Green Insights

Defunding DEI Hits a Legal Wall: Courts Shield Federal Funding Recipients from Biased AI Overreach, Workforce Bulletin

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