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].”

DOJ’s opinion identifies three limiting principles that must govern any constitutional application of disparate-impact liability under Title VII, stressing that “each caveat is essential to avoid the conclusion that Title VII violates the Constitution’s equal-protection guarantee.”

1. First, the business-necessity defense — the standard employer defense to disparate impact claims — must provide employers significant leeway, and a challenged practice need only be “rational, convenient, or helpful for serving a valid business purpose.” DOJ noted that “Only irrational or arbitrary practices with no plausible job-relatedness can create disparate impact theory.” Workplace requirements and selection procedures such as background checks, aptitude tests, knowledge-based tests, SAT scores, and high-school graduation requirements are presumptively job-related.
2. Second, disparate-impact claims must satisfy a robust causality requirement, and a plaintiff must demonstrate, at the pleading stage and beyond, that the specific employment practice itself, and not external factors or other employer practices, caused the alleged disparate impact.
3. Third, reversing the approach under UGESP, a plaintiff — not the defendant —  must identify a viable alternative practice that is equally effective for the employer and would produce less disparate impact.

Applying these principles, DOJ concluded that two specific features of EEOC’s regulatory scheme are unlawful and unconstitutional. According to DOJ, UGESP’s validation-study framework unconstitutionally saddles employers with onerous validation requirements that impose detailed documentation requirements (between 19 and 34 “essential” criteria depending on the type of validity study) that go well beyond what Title VII’s business-necessity defense properly demands, screening for more than just the “artificial, arbitrary, and unnecessary barriers” that the law actually prohibits. These requirements, per DOJ, pressure employers to avoid liability through race-based decision-making rather than allowing them to use reasonable, job-related selection procedures. Separately, DOJ states that the EEOC’s Affirmative Action Guidelines purport to authorize and expressly encourage “racial preferences” in response to actual or anticipated disparate impacts, including where no violation of Title VII has been established, which DOJ concluded goes far beyond what the Constitution and Title VII permit.

EEOC Chair Andrea Lucas thanked DOJ “for the thoughtful and insightful analysis” and affirmed the EEOC’s belief that “this opinion will provide clarity regarding the Constitutional limits of disparate impact in employment discrimination matters.” The EEOC has already moved to significantly curtail any application of the disparate impact theory per an internal EEOC agency memo issued after Executive Order 14281, in which the EEOC indicated that it planned to close almost all pending charges based solely on disparate impact by September 30, 2025. With this DOJ opinion, it is even less likely that the EEOC will investigate employee claims based on disparate impact theories and will instead immediately issue right-to-sue letters.

While the DOJ opinion reflects a sea change within the government, from a practical standpoint, it does not change employer obligations under Title VII or potential liability for disparate impact discrimination, which continues to be governed by existing case law. For now, the language of Title VII and existing case law continue to recognize the disparate impact theory of liability.

Crowell & Moring’s Labor & Employment Group is actively monitoring these developments and is available to advise clients on these complex and shifting issues.

Crowell would like to thank Lauren Phillips for her contribution to this alert.