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SDB Preference Constitutional

Client Alert | less than 1 min read | 08.02.04

In Rothe Dev. Corp. v. U.S. Dep't of Def. (W.D. Tex. July 2, 2004), the district court found that, although the initial enactments of a small disadvantaged business preference in DOD procurements were unconstitutional, in the 2003 version Congress sufficiently heeded the Supreme Court's affirmative action decisions in the past few years and supplied a "strong basis in the evidence" of racial discrimination to support the reenactment of the preference and withstand a facial challenge. The court brushed aside the evidence that the Asian-Americans benefited by the preference in the particular procurement were financially well off, noting that such evidence is only relevant to an administrative challenge to the SDB designation, not a constitutional challenge.

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Client Alert | 3 min read | 06.12.26

DOJ Guidance Backs Away From Disparate Impact Liability

On June 9, 2026, the U.S. Department of Justice (DOJ) issued a formal opinion concluding that the Equal Opportunity Employment Commission’s (EEOC) existing interpretations of Title VII of the Civil Rights Act of 1964 (Title VII) disparate-impact liability, including the Uniform Guidelines on Employee Selection Procedures (UGESP), are unconstitutional. According to the opinion, EEOC’s prior interpretations contemplate liability based on disproportionately adverse effects alone, without regard to an employer’s likely intent, rather than treating disparate impact as an evidentiary mechanism to “smoke out” intentional discrimination. DOJ found that this approach functions as a “qualified racial-proportionality mandate” that places “a racial thumb on the scales, often requiring employers to evaluate the racial outcomes of their policies, and to make decisions based on (because of) those racial outcomes.” The opinion fulfills one mandate of Executive Order 14281, which rejected disparate-impact liability insofar as it “creates a near insurmountable presumption that unlawful discrimination exists wherever there are any differences in outcomes among different [demographic groups].”...

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