The EEOC’s Retreat from Disparate Impact: What It Means for Employers
In September 2025, the Equal Employment Opportunity Commission (EEOC) confirmed it will no longer investigate disparate impact claims — those alleging that a neutral workplace policy disproportionately harms protected groups without proof of intent. This policy follows Executive Order 14281 and requires the EEOC to close pending impact-only cases and issue right-to-sue letters instead.
Why It Matters
While the EEOC’s shift narrows federal enforcement, it does not eliminate liability. Private plaintiffs, state regulators, and local governments can still bring disparate impact claims under Title VII and related laws. Some jurisdictions, including New York City and California, even require employers using AI or automated hiring tools to perform bias audits. This change comes as employers increasingly use artificial intelligence in hiring, promotion, and performance evaluations. If algorithms rely on biased data, they may unintentionally screen out applicants based on race, age, or gender — classic disparate impact territory. Without EEOC oversight, employers bear greater responsibility for identifying and correcting algorithmic bias.
Internal Investigations: Your First Line of Defense
Now more than ever, employers must treat internal investigations as both a compliance safeguard and a risk management tool. A strong investigation program can identify potential disparate outcomes early, before they evolve into litigation. Effective reviews include:
Data analysis: Regular audits of hiring, pay, and disciplinary patterns.
Policy review: Checking that criteria are job-related and consistently applied.
Vendor accountability: Ensuring AI or automated tools are validated for bias.
Independent oversight: Using neutral investigators to enhance credibility and fairness.
Even in this new era where the EEOC is stepping back from disparate impact, independent investigators retain strong value — arguably greater than before:
Neutrality and credibility: Particularly when structural or systemic issues are involved, an external investigator signals that the review is not biased by internal functional pressures
Technical depth: Experienced external investigators often bring special expertise (data science, industrial-organizational psychology, auditing) that internal teams may lack
Standards and defensibility: Their methodology, documentation, and reputation can bolster defensibility should litigation or regulatory scrutiny arise
Scalability for higher-risk cases: For investigations that cross business units, require complex data, or involve senior leadership, a neutral outside expert helps avoid internal conflicts
Perception management: Stakeholders (complainants, employees, regulators, defense counsel) may view an external review as more credible or trustworthy
Independent validation: Even when internal investigators lead, a periodic “quality check” or peer review from external experts can improve the process and outcomes
In sum, while the EEOC’s retreat from disparate impact changes the external enforcement horizon, it does not reduce the internal investigatory burden. To the contrary, the internal process must now absorb more of the structural review function — and independent investigators remain one of the strongest tools employers have to ensure fair, defensible, and credible factfinding.
Looking Ahead
This is a major shift in enforcement culture, and there are still many unknowns. For instance:
Just because the EEOC steps back doesn’t guarantee that courts or plaintiffs will abandon disparate impact claims.
It's unclear precisely how the EEOC will respond to hybrid claims (disparate treatment + disparate impact).
State and local agencies may continue (or even intensify) disparate impact enforcement, creating patchwork risk.
There may be legal or judicial challenge to the EEOC’s decision or the executive order itself.
Over time, the courts may reinterpret or reinstate disparate impact theories under new frameworks.
Given the novelty and high stakes of these changes, we’ll continue watching closely how the shift plays out in actual enforcement and litigation—and update our guidance accordingly.