Labor & Employment Law Update

A new legal opinion from the U.S. Department of Justice (DOJ) is reshaping how employment discrimination claims based on unequal outcomes may be handled. On June 9, 2026, the U.S. DOJ’s Office of Legal Counsel (OLC) issued a formal legal opinion concluding that the EEOC's approach to disparate-impact liability is unconstitutional. While this theory of discrimination still exists, the opinion narrows it and raises the bar for employees who bring these claims. As a result, employers may have increased flexibility in using common hiring tools such as criminal background checks and aptitude tests without fear that they could face discrimination claims—but it does not make intentional discrimination any less illegal.

What Is Disparate Impact in Employment Law?

Disparate-impact liability is the legal principle that a hiring/employment practice can be illegal even when there was no intent to discriminate, so long as the practice produces unequal outcomes across protected groups. Think of it this way: if a company requires applicants to be over six feet tall, it is neutral on its face but might have the impact of disproportionately adversely affecting female applicants. Unless a company can establish the business necessity of the requirement, it might be liable under the disparate impact theory. In reviewing the application of the disparate impact theory the OLC concluded  that the EEOC stretched this doctrine well past its constitutional limits by operating it as a de facto racial-proportionality mandate and as such reversed course in the requirements for proof.

How the DOJ Opinion Changes Disparate Impact Rules for Employers

Under the OLC’s opinion, businesses can use hiring practices that are generally related to job performance, such as degree requirements, aptitude tests, knowledge-based tests, criminal-background checks, etc. without fear that they are violating Title VII even if the practice may result in different outcomes for different protected categories. As justification for using these tools, employers only need to show that the practice is reasonable, useful, or helps serve a valid business purpose rather than a business necessity.

The opinion also requires that employees who bring disparate-impact claims meet two requirements. First, they must show that the specific hiring practice directly caused the unequal outcomes they are challenging. Second, they must identify another approach that would not only be equally effective for employers but would result in fewer unequal outcomes. In other words, plaintiffs must prove that the employer’s method specifically caused the unequal outcome and present a workable, equally effective fairer alternative. These requirements and interpretation are a departure from past precent and interpretation.

It also represents a trend of continued narrowing of discrimination theories, specifically disparate impact, at the administrative level. In December, the Justice Department published a final rule effectively ending disparate impact liability under Title VI of the Civil Rights Act of 1964 for any program or activity that receives federal financial assistance.

What This Means for Employers’ Hiring Practices

It is important to remember that this opinion does not make intentional discrimination any less illegal, nor does it mean employers should completely forget about disparate impact. The opinion is an administrative opinion and not a Supreme Court ruling. Courts are not bound by it and plaintiffs' counsel will continue to bring disparate-impact claims under broader theories in state and federal court. Rather, this opinion will likely make it more challenging for employees who file employment discrimination claims at the EEOC.

For now, employers should continue to ensure that their hiring and employment practices do not intentionally or inadvertently discriminate against individuals  and continue to watch this space as this likely will not be the last guidance or opinion that comes out regarding this issue.