On April 23, 2025, President Trump issued an executive order - “Restoring Equality of Opportunity and Meritocracy”- banning the use of disparate-impact liability in “all contexts to the maximum degree possible.” Disparate-impact liability is when a creditor can be liable for a practice or policy discriminatory in effect because it has a disproportionately negative impact on a prohibited basis, even though the creditor has no intent to discriminate, and the practice appears neutral on its face. According to the executive order, “disparate-impact liability all but requires individuals and businesses to consider race and engage in racial balancing to avoid potentially crippling legal liability.” 

Pursuant to the executive order, all federal agencies will deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability. The attorney general will report to the president, all existing regulations, guidance, rules or orders imposing disparate-impact liability, and detail agency steps for their amendment or repeal. The attorney general will also assess all pending investigations, civil suits or positions taken in ongoing matters that rely on a theory of disparate-impact liability, including laws prohibiting unfair, deceptive, or abusive acts or practices, and take appropriate action consistent with the policy of the order. 

Have additional questions regarding the recent executive order? Rely on our compliance pros to help navigate this and any other compliance questions you may have.