The Department of Justice Office of Legal Counsel issued an opinion last week that would sharply limit, or even eliminate, disparate-impact claims for employment discrimination under Title VII. OLC said that certain “limiting principles” were necessary to ensure that disparate-impact claims don’t violate equal protection. As a practical matter, these principles could eviscerate disparate-impact claims under Title VII.
According to OLC, the Equal Employment Opportunity Commission’s guidelines for disparate-impact claims under Title VII do not incorporate these principles. OLC opined that the guidelines are therefore unconstitutional.
The opinion is not legally binding in the same way a court ruling is. Still, the opinion will affect the way EEOC investigates and processes Title VII complaints. In particular, EEOC will adopt OLC’s interpretation of disparate-impact theory under Title VII. And because EEOC is the gate-keeper for Title VII claims (plaintiffs have to file a complaint with EEOC before bringing their case in court), EEOC will almost surely reject most or all disparate-impact claims going forward. At the very least, the OLC opinion gives employers a roadmap for avoiding disparate-impact liability. (If EEOC rejects a claim, a plaintiff can still sue on their own in court. The OLC opinion does not bind courts, although they may find it persuasive. And whatever happens with the government’s new approach to disparate impact, plaintiffs can still turn to state-law anti-discrimination remedies that may provide greater disparate-impact protection. OLC’s opinion doesn’t, and can’t, change that.)
Title VII imposes liability for both (1) employment actions based on intentional discrimination and (2) employment actions that are facially neutral but nevertheless have a disparate impact based on race, color, religion, sex, or national origin.
Under Title VII, to prevail on a disparate-impact claim, a plaintiff must first establish a prima facie case of discrimination by showing that a particular employment practice created a disparate impact. If a plaintiff carries this burden, then the burden shifts to the employer to show “that the challenged practice [wa]s job related for the position in question and consistent with business necessity.” Finally, if an employer makes this showing, the burden shifts back to the plaintiff to demonstrate that the employer refuses to adopt an “alternative employment practice” that would reduce the disparity. 42 U.S.C. Sec. 2000e-2(k).
OLC opined that disparate-impact theory under Title VII raises “serious equal-protection” concerns, because it “tends to incent–and even coerce–employers to make race-based decisions to avoid liability or the threat of liability.” And: “By pressuring employers to take race-based actions in the name of proactively addressing potential statistical disparities, disparate-impact liability allows the government to engage in race discrimination indirectly.” OLC said that this government “incent[ing]” and “coerc[ing]” violates equal protection.
OLC said that disparate-impact theory requires updating, in the same way that the Supreme Court’s recent ruling in Louisiana v. Callais (2026) updated the disparate-impact approach to racial gerrymandering in Section 2 of the Voting Rights Act. This updating requires three things:
“First, the business-necessity defense to liability must provide defendants significant ‘leeway to state and explain the valid interest served by their policies.’” According to OLC, this means that “a challenged practice need only be a ‘reasonable’ way of accomplishing a ‘valid’ interest.” OLC wrote that this new low standard allows employers to offer “competing explanations” of the disparities.
“Second, any disparate-impact claim must satisfy a robust causality requirement to avoid reading Title VII as imposing an unconstitutional quota system.” According to OLC, this will “ensure that [employers] will not resort to impermissible ‘racial quotas’ to stave off lawsuits.”
“Third, the plaintiff must offer a viable alternative to the challenged practice that accomplishes the employer’s legitimate goals ‘just as well.’”
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