By Andrew Miller
If you’ve ever required a high school diploma or run a background check on a job candidate, your business may have been one complaint away from a federal discrimination claim without knowing it.
Under federal employment law, you can face discrimination claims not just for intentionally treating someone differently, but for using a neutral policy that produces unequal outcomes across protected groups.
The concept is called disparate impact liability, and it’s been part of employment law under Title VII since a 1971 Supreme Court case.
Here’s what it means in practice: a hiring requirement doesn’t have to be discriminatory on its face. If it produces results that skew against a protected class like race, gender, or another protected category, it can still expose you to a claim. Intent is beside the point.
On June 9, the DOJ’s Office of Legal Counsel issued a memo arguing the Equal Employment Opportunity Commission’s (EEOC) enforcement of this doctrine has gone too far and may be unconstitutional.
The OLC argued that holding employers liable for statistical disparities in hiring outcomes effectively pressures them into making race-conscious decisions just to stay out of trouble. According to assistant attorney general Elliot Gaiser, that’s the opposite of what the law intended.
Civil rights advocates are already pushing back, arguing the opinion will make it harder for employees to challenge discrimination that hides behind neutral-looking policies. Ultimately, that’s a debate for the courts. So far, the law hasn’t changed.
What has changed is the federal government’s posture towards employers. The EEOC is signaling it won’t be scrutinizing your background check policy because the hiring numbers came out disproportionate.
As long as your hiring practices are tied to legitimate needs, you’re in a more defensible position today than you were a week ago. The practical guidance hasn’t changed: use job-related criteria when hiring, document your reasoning, and apply your policies consistently.
The rules didn’t tighten. They loosened. Now’s a good time to make sure your practices are worth defending if it comes down to it.
P.S. Getting your hiring practices in order is on you. Getting your financing in order is where Signet comes in. Let’s talk.