The federal government recently took two related steps, indicating a shift in its approach to employment discrimination under Title VII:
First, on June 9, 2026, the Department of Justice’s (“DOJ”) Office of Legal Counsel issued a memorandum opinion concluding that the EEOC’s current applications of its disparate impact and affirmative action regulations are unconstitutional, and that the disparate impact guidelines “pressured employers to engage in racial discrimination.” The DOJ’s memorandum effectively proposes heightened restrictions on disparate impact claims and may lead to changes in workplace hiring and selection procedures.
Then, on June 30, 2026, the Equal Employment Opportunity Commission (“EEOC”) voted to rescind its long-standing rule on voluntary affirmative action plans.
While not binding, these actions carry real implications for private employers, as they demonstrate that the federal government is shifting away from disparate impact liability theories of employment discrimination. At the same time, however, many states have been amending their own laws to make disparate impact liability a viable statutory theory. The following article explains the EEOC’s rescission and the DOJ’s memorandum and outlines some practical takeaways that employers should consider in light of these developments.
EEOC’s Rescission of its Affirmative Action Rule
Background on EEOC’s Affirmative Action Rule
Nearly fifty years ago, in 1979, the EEOC issued an interpretive rule entitled “Affirmative Action Appropriate Under Title VII of the Civil Rights Act of 1964, as Amended” (“Affirmative Action Rule”). 29 C.F.R. Part 1608. The regulatory guidance, codified in federal regulations, describes the circumstances in which employers may adopt plans, known as affirmative action plans, to address barriers to equal employment opportunity or imbalances in their workforces. The guidance, which remains in effect, describes how private employers may voluntarily adopt affirmative action measures without running afoul of Title VII.
The rule also includes a safe harbor provision, allowing employers who act in good faith, in reliance on the EEOC’s guidance, to raise that reliance as a defense in a Title VII action against them. The 1979 rule instructs that when establishing an affirmative action plan or program, employers must: (1) conduct a reasonable self-analysis of whether their current or past employment practices had an adverse impact on protected groups; (2) identify a reasonable basis for concluding that affirmative action measures are warranted; and (3) take reasonable action specifically tailored to the issues identified.[i]
EEOC Rescinds the Affirmative Action Rule
On June 30, 2026, the EEOC rescinded the Affirmative Action Rule in its entirety, as well as Section 607 of the commission’s compliance manual, removing both the EEOC’s long-standing guidance on how to structure a voluntary affirmative action plan and the good-faith-reliance defense employers have been able to invoke pursuant to Title VII.
Importantly, the rescission of the rule does not amend Title VII, does not overrule Supreme Court precedent permitting voluntary affirmative action plans in limited circumstances, and does not eliminate or override other obligations pursuant to local, state, or federal laws that may continue to permit or encourage certain affirmative action measures. Andrea Lucas, the head of the EEOC, explained that the rescission “reaffirms that Title VII’s protections apply equally to all American workers and that equal opportunity remains a defining commitment of our democracy.”
This action is consistent with the EEOC’s ongoing efforts to further restrict workplace DEI programs, which the federal government has deemed discriminatory. It follows a number of federal activities consistent with federal deregulation and a reevaluation (or outright reversal) of diversity, equity, and inclusion initiatives or other race- or sex-based policies or practices.
DOJ Declares the EEOC’s Disparate-Impact and Affirmative Action Guidelines Unconstitutional
Background on Disparate-Impact Liability
Title VII of the Civil Rights Act (“Title VII”) is a statute that prohibits employment discrimination based on race, color, religion, sex, or national origin. Disparate-impact liability is a theory of discrimination under Title VII. Disparate-impact liability focuses on the effect of the practice, not the employer’s intent. Under the theory, which has existed in some form for over fifty years, a plaintiff may show that an employer violated Title VII when a facially neutral employment practice has a disproportionately adverse impact on members of a protected class, even without discriminatory intent by the employer (i.e., by using selection criteria that disproportionately affect members of a protected group).
There is a three-part burden-shifting test to evaluate disparate-impact liability. First, a plaintiff must show that a particular practice results in a disparate effect. The burden then shifts to the employer to show the practice is “job related for the position in question and consistent with business necessity.”[ii] Finally, if the employer makes that showing, the burden shifts back to the plaintiff to identify an equally effective alternative practice with less disparate impact.
The DOJ’s Memorandum Opinion
In its June 9 memorandum opinion, the DOJ targets the EEOC’s interpretation and implementation of disparate-impact liability under Title VII, specifically declaring that the EEOC’s Uniform Guidelines on Employee Selection Procedures (“UGESP”) and its Affirmative Action Guidelines are unconstitutional. In the memo, the DOJ reasons that disparate impact may serve as an evidentiary tool to “smoke out intentional discrimination—imposing liability only when disproportionate adverse effects give rise to a strong inference of intentional discrimination,” but not as a basis for liability from those disproportionate effects alone.
The DOJ’s memorandum also takes issue with “validation studies,” which are formal, evidence-based analyses designed to demonstrate that a particular employment selection process measures qualities that are relevant to successful job performance. Under the agency’s existing guidance, employers must satisfy dozens of documentation requirements and technical standards that govern how a validation must be performed. The DOJ concluded that the EEOC’s detailed requirements set forth in the 1979 interpretive rule are unlawful.
The opinion also argues that the guidelines improperly shift the burden of proving specific causation to the employer, requiring it to identify the precise cause of any disparity with an “overbearing” level of detail. These guidelines, the DOJ argues, force employers to conduct costly validation studies and compel them to engage in race-based decision-making to avoid liability. As to the Affirmative Action Guidelines, the DOJ concludes they are unconstitutional because they authorize and encourage racial preferences in workplace and employment selection practices without requiring a strong evidentiary basis of discriminatory intent. The DOJ argues these guidelines conflict with both Title VII and prior Supreme Court decisions that require an employer to, at minimum, demonstrate “a strong basis in evidence” before taking race-conscious action. These are the same affirmative action guidelines that the EEOC has now proposed to rescind.
The DOJ argues an employer should face disparate-impact liability only where the evidence strongly supports an inference that disparities were informed by an employer’s discriminatory intent. The memo suggests enforcement through three limiting principles:
Business-Necessity Defense
The business-necessity defense would make it easier for employers to justify their practices by requiring an employer to show only that its practice is reasonably job-related. Certain workplace and selection criteria – such as background checks and aptitude tests – are considered presumptively job-related. Conversely, practices that create “artificial, arbitrary, and unnecessary barriers,” are not considered plausibly job-related and can trigger liability.[iii]
The business-necessity defense would be “an appropriately low threshold,” allowing for “competing explanations” of an alleged disparity when a court assesses whether a challenged policy serves a legitimate business purpose or is the “functional equivalent to intentional discrimination.”[iv] Under this approach, a policy may be treated as intentionally discriminatory once all legitimate reasons for that policy have been eliminated as plausible. In other words, any justification that demonstrates that a policy or practice serves “some legitimate goal” can rebut an inference of discriminatory intent drawn from its adverse impact.
Causality Requirement
The causality requirement would impose a heavier burden on plaintiffs by requiring them to identify a specific practice and prove that the practice is actually causing a disparate impact. Under the DOJ’s interpretation, simply relying on a statistical imbalance would not be sufficient to prove disparate impact. The DOJ ties this principle to its concern about quotas, specifically that without a clearly established causal link, employers could be subject to liability based on a statistical imbalance alone and may turn to implementing racial quotas to avoid litigation.
Viable Alternative Requirement
Under the viable alternative requirement, a plaintiff would have to identify a different practice and show it would both reduce the disparity and serve the employer’s goals just as effectively as the challenged practice. Only an employer’s refusal to implement an “equally effective and administrable alternative” warrants a strong presumption that the challenged policy is a pretext for discrimination. But discriminatory intent is not presumed if an employer refuses to adopt an alternative that is not equally effective or administrable.
For its part, the EEOC issued a statement indicating that it is “grateful for the thoughtful and insightful analysis” provided by the DOJ and expressed appreciation for the opinion’s “clarity regarding the Constitutional limits of disparate impact in employment discrimination matters.”
What Does This Mean for Employers?
Critically, it is important to recognize that neither action is binding on employers. The DOJ opinion is not a statute or court ruling; it is simply a representation of the executive branch’s opinion, and it does not eradicate the possibility of disparate-impact liability. Likewise, the EEOC’s rescission does not render affirmative action plans unlawful. Together, the two developments signal that disparate impact enforcement and federal protection for voluntary affirmative action plans are facing increasing vulnerability at the federal level.
Employers should keep several considerations in mind as these developments unfold. First, employers should remain attentive to state and local laws governing disparate-impact liability, as plaintiffs can still bring claims based on state and local employment discrimination grounds. Disparate-impact liability remains a means by which plaintiffs can establish a discrimination claim in many states, even where the employer did not intend to discriminate. Moreover, states are taking action in response to the current federal administration’s rejection of this theory of liability. In New York, for example, Governor Kathleen Hochul recently signed a law that codifies disparate impact liability as a method of establishing unlawful discrimination under New York State Human Rights Law. New Jersey also recently amended its laws to include the concept of disparate impact liability, and its regulations include a list of examples of types of policies that could constitute unlawful disparate impact, including automated employment decision-making technology. Employers should be aware that if they use artificial intelligence-infused tools in hiring and promotion processes, they need to conduct a disparate impact analysis to ensure they do not have a discriminatory effect (even where there is no intent to do so).
Second, they should identify and remove practices that do not reasonably relate to a legitimate business purpose, and maintain transparency in hiring, promotion, and compensation decisions where possible, ensuring these practices do not turn on protected characteristics.
Third, employers should examine their affirmative action and DEI programs to confirm that existing practices are aligned with these developments and adjust them where needed. Finally, employers should limit their reliance on the safe harbor provision of the 1979 interpretive rule which may not provide the same protection now that the rule’s rescission has taken effect.
[i] See 29 C.F.R. Part 1608.4(a)-(d)
[ii] 42 U.S.C. § 2000e-(k)(1)(A)(i)
[iii] Texas Dep’t of House & Community Affairs v. Inclusive Communities Project, Inc., 576 U.S. 519, 543 (2015)
[iv] Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 987 (1988)
This content is for informational purposes only and does not constitute legal advice. The outcome of the pending litigation remains to be determined and is not guaranteed.
This information is provided for educational purposes only. It should not be construed or relied on as legal advice. It is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication or other legal counsel.
