DOJ Finds EEOC’s Disparate Impact Guidelines Are Unconstitutional - What It Means For Employers

Legal Alert

June 22, 2026

On June 9, 2026, the U.S. Department of Justice’s Office of Legal Counsel issued a formal opinion finding the Equal Employment Opportunity Commission’s guidelines for disparate impact liability under Title VII of the Civil Rights Act of 1964 are unconstitutional. According to the DOL, the EEOC’s long-standing guidelines “pressured employers to engage in racial discrimination” by subjecting employers to Title VII liability for employment decisions that result in statistically unequal outcomes for employees in different protected classifications regardless of an employer’s discriminatory intent.

The DOJ’s interpretation represents a departure from an outcome-focused disparate impact framework codified by Congress in Title VII towards one that is centered on proof of intentional discrimination. The DOJ opinion identifies three limiting principles to narrow the scope of potential liability for disparate impact claims:

It creates a more employer-friendly “business-necessity defense” such that employers need only show that a challenged practice is “reasonable, useful, or helps serve a valid business purpose” (e., not “artificial, arbitrary, and unnecessary”). Most common employment selection procedures – such as background checks, aptitude tests, SAT scores – presumptively meet that standard.
It requires plaintiffs to show that a specific employment practice directly caused the alleged disparate impact, without regard to other external factors.
It requires plaintiffs to identify an equally-effective alternative employment practice that achieves the employer’s valid business goals but reduce the unequal impact of the challenged practice – without causing increased cost or burden to the employer.

The DOJ opinion is consistent with the EEOC’s recently-issued National Enforcement Plan outlining its litigation framework for Title VII enforcement during the period 2025-2029, including that the EEOC will eliminate the use of disparate impact in its investigations, consistent with President Trump’s Executive Order 14281 which was the subject of a previous SGR Client Alert (The EEOC’s National Enforcement Plan: What the New Playbook Means for Employers - SGR Law).

Takeaways:

Reduced federal enforcement of disparate impact claims. Employers can expect the EEOC to reissue guidelines consistent with the DOJ opinion and the more employer-friendly standards. At least in the short-term, employers should expect fewer federal investigations and actions based solely on disparate impact allegations.
But, no effect on state agency enforcement, or private litigation, of disparate impact claims. Importantly, despite the potential of a broader shift in employer disparate impact liability under Title VII, the DOJ opinion does not eliminate disparate impact liability, and its stance has not yet been tested by the courts. Therefore, state fair employment agencies and private litigants are free to advance such claims.
And, no effect on disparate impact claims under the Age Discrimination in Employment Act. The DOJ opinion specifically does not modify disparate impact liability for age discrimination under the ADEA.
Review existing HR and compliance procedures. Employers are well advised not to end their impact analyses and compliance procedures just yet. It’s true that, for the time being, the DOJ’s employer-friendly framework supports an employer’s ability to implement certain presumptively lawful employment-selection measures without panicking that such measures would fail a disparate impact analysis. However, it still is necessary to demonstrate (including through documentation) that selection processes are reasonable and job-related, as there undoubtedly will be legal challenges to the DOJ’s more onerous standard for establishing disparate impact liability, and employers still risk enforcement on the state level and through private actions.