Understand Disparate Impact in Employment Discrimination Law

K-12 schools, colleges, and universities strive to make employment decisions that are fair, job-related, and aligned with their educational missions. But even well-intentioned policies can create discrimination liability risk if they disproportionately affect certain groups of applicants or employees. Understanding the basics of disparate impact analysis can support sound decision-making, promote legal compliance, and reduce liability exposure.

Disparate Treatment vs. Disparate Impact

Disparate treatment, the more familiar type of discrimination, occurs when an employer intentionally treats an applicant or employee differently based on a protected characteristic such as race, sex, national origin, religion, age, or disability.

Under disparate impact, however, the employer’s intent or motive is irrelevant. Disparate impact analysis focuses on the effects of an employer’s policy or practice. A “neutral” rule, which applies to everyone, can still violate the law if it disproportionately affects members of a protected group and is not sufficiently job-related and consistent with business necessity.

For example, a requirement that applicants have an uninterrupted employment history may be facially neutral but could disproportionately affect women or others who have taken extended time off for caregiving responsibilities.

Federal disparate impact claims arise most often under:

• Title VII of the Civil Rights Act of 1964
• The Age Discrimination in Employment Act (ADEA)
• The Americans with Disabilities Act (ADA) (in limited contexts)

Common Education Risk Areas

Educational institutions often encounter disparate impact allegations in the context of:

• Hiring/promotion criteria for employees, particularly faculty
• Minimum degree requirements
• Standardized screening tests
• Background check policies
• Physical ability requirements for certain jobs
• Employee selection for reductions in force based on subjective decisions

Disparate Impact: The Legal Framework

Courts usually apply a three-step “burden-shifting” analysis in disparate impact cases:

Step One: Prima Facie Case

The applicant or employee (“plaintiff”) must first identify an employment practice (such as a physical requirement or minimum test score) and show it has a statistically significant adverse impact on a protected group.

This step usually requires data. For example, a physical requirement could eliminate a substantially higher percentage of women than men.

Step Two: Business Necessity Defense

If the plaintiff shows the challenged practice creates a disparate impact, the burden shifts to the employer to demonstrate the practice is job-related and consistent with business necessity. Documentation is important.

Business necessity in the education context could include legally mandated background checks to work with minors or credentialing requirements to satisfy accreditation standards.

Step Three: Less Discriminatory Alternative

If an employer demonstrates a challenged practice is job-related and necessary, the plaintiff still may prevail by showing a less discriminatory alternative exists and the employer refused to adopt it.

If a cognitive test used for employment or promotion disproportionately excludes members of certain groups, for example, the plaintiff might point to an alternative assessment method that predicts performance equally well but has less adverse impact. 

Federal Enforcement Changes

Federal enforcement priorities change depending on presidential administration policy. In April 2025, the Trump administration issued Executive Order 14281, “Restoring Equality of Opportunity and Meritocracy,” which made clear the administration intended to eliminate enforcement of disparate impact liability to the extent possible and focus on disparate treatment (intentional) discrimination.

As a result of the order, the Equal Employment Opportunity Commission (EEOC) directed its offices to close pending discrimination charges that alleged only disparate impact and allow claimants to sue in federal court without EEOC involvement. Additionally, the Department of Justice (DOJ) issued a new rule eliminating disparate impact liability from its regulations implementing Title VI, which the DOJ enforces.

An Important Caveat

Despite the headlines, the EEOC and DOJ actions do not free K-12 schools, colleges, and universities (or other employers) from potential liability for disparate impact discrimination. The U.S. Supreme Court has recognized disparate impact discrimination since 1971, and in the Civil Rights Act of 1991, Congress incorporated disparate impact into Title VII. Unless and until the court or Congress changes the law (which federal agencies cannot do), private plaintiffs can continue to sue employers directly for employment discrimination based on disparate impact. And because laws prohibiting discrimination typically let successful plaintiffs recover their attorneys’ fees, this type of litigation remains attractive to plaintiffs’ lawyers.

Practical Actions  

For HR leaders and risk managers, the goal is to ensure your institution’s employment practices are defensible and well-documented, rather than to eliminate all statistical disparities. Take these steps to help avoid or reduce disparate-impact liability.

Consult Experienced Legal Counsel

If you suspect a job applicant or employee may raise disparate impact discrimination claims against your institution, promptly seek advice from an attorney with appropriate expertise. Counsel should understand the unique nature of disparate impact matters, including working with statistical experts to evaluate the data and demonstrating that a business practice is job-related and consistent with business necessity.

Audit High-Risk Employment Practices

Preferably in consultation with counsel (so attorney-client privilege would apply), your institution should consider auditing its:

• Screening and testing tools
• Promotion (including faculty tenure) criteria
• Performance management systems
• Reduction-in-force selection criteria or systems
• Compensation structure

Document Job-Relatedness

Before implementing or maintaining a job selection criterion:

• Tie the criterion directly to essential job functions.
• Create and keep written justification explaining why it is necessary.
• Validate testing tools when possible.

While legal or regulatory mandates, accreditation standards, or safety concerns can strengthen the defensibility of criteria, ensure you explain the connection clearly and in writing.

Evaluate Alternatives 

If analyzing a particular practice produces concerning statistical disparities, consider ways to:  

• Modify the practice without compromising institutional needs. 
• Find an effective alternative method. 
• Structure or standardize subjective decision-making to reduce bias. 

Train Decision-Makers 

Your search committees and hiring managers must understand the:

• Differences between essential and preferred qualifications
• Risks of informal or inconsistent application of job criteria
• Importance of documenting their decision-making process

Remember State Discrimination Laws

Educational institutions must continue to comply with state employment laws. Multiple states, including Illinois (as of Jan. 1, 2027), Minnesota, New Jersey, and New York, explicitly recognize disparate impact as a form of prohibited employment discrimination under their own statutes.

More From UE

The Future of Disparate Impact Claims in Education-Related Litigation 

This material is presented for general informational and risk management purposes only. It should not be considered legal, coverage, or other professional advice. Readers should consult their legal counsel, broker, or other appropriate adviser regarding their specific circumstances. 

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