What Is Disparate Impact?

Disparate impact refers to the result of the application of a standard, requirement, test or other screening tool used for selection that—though appearing neutral—has an adverse effect on individuals who belong to a legally protected class. The U.S. Congress has incorporated disparate impact concepts in anti-discrimination laws, including statutes dealing with civil rights, education, housing, and employment.

This standard also is adopted in laws and regulations addressing discrimination on the basis of additional characteristics including sex, sexual orientation, gender identity or expression, religion, age, military status, equal pay, pregnancy, disability, or genetic information. Although courts generally have upheld such laws, a number of judicial opinions have attached conditions and requirements limiting their application.  

Key Takeaways

  • Disparate impact means the selective adverse effect of a facially neutral law, requirement, or process, which lacks any relevant justification, on individuals belonging to a legally protected group.
  • Federal statutes and regulations authorize the use of disparate impact analysis to identify unlawful discrimination.  
  • Disparate impact analysis first received judicial acceptance in cases holding that voting laws adversely impacting individuals on the basis of race, color or ethnic origin were illegal under civil rights statutes.
  • Disparate impact testing to determine discrimination in housing, employment, credit, education, and other areas as well as voting rights—based on religion, gender, sexual orientation, age, disability, pregnancy, and other characteristics as well as race—has generated political controversy.

Understanding Disparate Impact

Disparate impact means the selective adverse effect of a facially neutral law, requirement, or process, which lacks any relevant justification, on individuals belonging to a legally protected group. Federal statutes and regulations authorize the use of disparate impact analysis to identify unlawful discrimination.  

Disparate impact analysis first received judicial acceptance in cases holding that voting laws that adversely impacted individuals on the basis of race, color or ethnic origin were illegal under civil rights statutes. In addition using disparate impact evaluation to identify discrimination based on race, color or ethnic origin, its use to determine discrimination in housing, employment, credit, education, and other areas, based on religion, gender, sexual orientation, age, disability, pregnancy, and other characteristics as well as race, has generated political controversy.

The invocation of disparate impact as a factor in determining discrimination and protecting minority rights against discriminatory state action arose in the civil rights era. Since that time, both Congressional action and judicial decisions have expanded the use of this analysis beyond racial contexts. Currently, 26 federal agencies have regulations that prohibit discrimination on the basis of race, color, or national origin and incorporate a disparate impact or discriminatory effects standard. The concept’s reach and interpretation, especially with respect to adverse effects on racial and ethnic groups, continue to be intensely debated in judicial, legislative and political arenas.

Disparate impact was the basis for the 1971 Supreme Court decision, Griggs v. Duke Power Co., interpreting Title VII of the 1964 Civil Rights Act and striking down a practice that had a racially disparate impact that was not justified by a business necessity. Although many commentators believed Griggs was rooted in the Equal Protection Clause of the U.S. Constitution as well as the 1964 law, a subsequent 1976 Supreme Court decision, Washington v. Davis,  rejected the view that Griggs was a Constitutional ruling and instead found it based solely on the statute.

The ruling in Washington v. Davis held that in order to be found unconstitutional, state action producing a racially disparate impact must have a racially discriminatory purpose. Accordingly, the invalidation of state action on the basis of a racially disparate impact without a showing discriminatory intent was limited to situations where a statute authorized using disparate impact.

Although Washington v. Davis denied the disparate impact principle a Constitutional basis, the decision effectively authorized statutory use of a disparate impact or effect as a standard for determining that a governmental action is discriminatory. In the following years, courts limited the application of disparate impact, and, in 1980, the Supreme Court applied a discriminatory purpose requirement to Section 2 of the Voting Rights Act in City of Mobile v. Bolden. The Court rejected a lawsuit charging that an at-large electoral system unfairly diluted African Americans’ voting strength and thereby violated their rights.

This decision prompted Congress to amend the Voting Rights Act in 1982 with specific language applying the disparate impact principle without an intent requirement. The amendment treats any governmental act or practice with respect to voting rights that “results in” a denial of rights on account of race or color, as illegal.  

Responding to further court decisions rejecting the use of disparate impact where discriminatory intent was not evident, Congress added a disparate impact test, without any reference to intent, to the Fair Housing Act (“FHA”)  and to federal employment discrimination law in the Civil Rights Act of 1991. In both cases, Congress overcame significant opposition; to enact the federal employment amendment, the Congress defeated a Presidential veto.  

Disparate impact tests are included in federal regulations affecting institutions that receive federal funds under a broad range of programs and activities.

  • For example, invoking Title VI of the Civil Rights Act of 1964, the Department of Education issued regulations that broadly prohibit organizations receiving any amount of federal funds from using “criteria or methods of administration which have the effect of subjecting individuals to discrimination because of their race, color, or national origin.” (Emphasis added.) 
  • In addition, regulations issued under Title IX of the Education Amendments of 1972—which prohibits sex discrimination in any program or activity at educational institutions receiving federal funds—include disparate impact analysis. Over the years, the consideration of disparate impact in educational matters from affirmative action to student discipline has provoked differing opinions.

Disparate Impact: Subsequent History

To the present day, efforts to expand and strengthen the use of a disparate impact test in a variety of contexts have met varying degrees of support and opposition. Changes in political control of the federal legislative and executive branches—and in the composition of the Supreme Court—have frequently entailed shifts in interpretation and enforcement of anti-discrimination laws generally and the use of disparate impact standards that consider the results or effects of laws in particular.

Disparate impact rules and tests

The use of disparate impact analysis to address racial discrimination has been the most contentious area. Civil rights advocates and various Democratic administrations strongly supported the enactment of laws with disparate impact standards. Opponents of disparate impact rules and affirmative action law, in particular, opposed such laws and promoted the appointment of conservative judges whose decisions interpreted disparate impact rules narrowly, thereby limiting their utility.

Nonetheless, conservatives concerned about religious freedom and the rights of pregnant and disabled persons supported disparate impact tests to protect individuals' rights in these situations. Courts and the Congress countered discrimination affecting religious minorities and pregnant and disabled persons, by developing requirements for accommodations to prevent adverse effects on these groups.

Trump vs. Biden

The debate about the disparate impact standard continues. The Trump Administration sought to roll back regulations that authorized the use of disparate impact analysis to identify and prohibit discrimination.

As its term ended, the Trump White House issued a notice announcing its intent to publish a final regulation weakening antidiscrimination enforcement without complying with the Administrative Procedure Act requirement that it first publish the proposed change and allow a public commentary period. The change was intended to eliminate the use of the disparate impact standard to counter discrimination on the basis of race, color, or national origin under Title VI of the 1964 Civil Rights Act and to prohibit only intentional discrimination.

 On January 26, 2021, President Biden affirmed the disparate effect standard in an order to the Secretary of Housing and Urban Development (HUD). He directed HUD to review Trump-era changes to anti-discrimination regulations and to take action to insure that HUD enforces fair housing laws and prevents practices having “an unjustified discriminatory effect.” With this order, the Biden Administration signaled its intent to increase enforcement of antidiscrimination laws and to employ disparate impact analysis in its efforts.