May 5, 2025, 15:28 PM by Neil Reichenberg, HRCI Contributing Writer

A recent executive order has directed federal agencies to deprioritize the enforcement of laws and regulations involving disparate impact liability, a significant shift in discrimination law that may affect hiring practices nationwide.

President Trump issued an executive order directing federal agencies to give a lower priority to enforcement of statutes and regulations that include disparate impact liability. The EEO-1 data collection is scheduled to begin on May 20^th. A House of Representatives Committee held a hearing on employer-provided health care. The chair of the Senate Committee on Health, Education, Labor, and Pensions issued a report on increasing the access of independent workers to portable workplace benefits.

Disparate Impact Executive Order Issued – President Trump issued an executive order seeking to eliminate the use of the disparate impact theory to prove discrimination. Disparate impact occurs when a neutral practice  results in disproportionate harm to members of a protected group. Disparate impact claims under Title VII of the Civil Rights Act of 1964 have been recognized ever since the 1971 decision issued by the United States Supreme Court in Griggs v. Duke Power Company.

The Executive Order states that “disparate impact liability has hindered businesses from making hiring and other employment decisions based on merit and skill, their needs, or the needs of customers because of the specter that such a process might lead to disparate outcomes, and thus disparate impact lawsuits…Because of disparate impact liability, employers cannot act in the best interests of the job applicant, the employer, and the American public.”

The Executive Order directs agencies to “deprioritize enforcement of all statutes and regulations to the extent they include disparate impact liability.” The Attorney General and the Equal Employment Opportunity Commission (EEOC) chair need to assess pending investigations, litigation, consent decrees and injunctions that rely on disparate impact liability and act consistent with the Executive Order. The Attorney General and the EEOC Chair also need to “issue guidance or technical assistance to employers regarding appropriate methods to promote equal access to employment regardless of whether an applicant has a college education, where appropriate.”

EEO-1 Data Collection to Begin on May 20^th – The Equal Employment Opportunity Commission (EEOC) announced that the 2024 EEO-1 report data collection is scheduled to begin on May 20^th. The EEO-1 report collects workforce demographic information and is required to be completed by private employers with at least 100 employees and federal contractors with at least 50 employees. One change that has been made to the form is that when reporting employee data only the binary options of male or female will be provided. The form previously included a nonbinary reporting option. The deadline for completing the form is June 24, 2025.

Hearing Held on Employer-Provided Health Care – The Subcommittee on Health, Employment, Labor and Pension of the House Committee on Education and the Workforce held a hearing on “A Healthy Workforce: Expanding Access and Affordability in Employer-Sponsored Health Care. Representative Rick Allen (R-GA), chairman of the subcommittee noted that rising costs for health care are impacting the ability of small employers to provide their employees with health care. He believes that businesses need flexibility to “expand access and affordability in their health care offerings.” One solution he recommended was expanding access to Association Health Plans that “allows employers to band together to purchase health coverage” resulting in more favorable rates.

Representative Tim Walberg (R-MI), chairman of the Committee on Education and the Workforce introduced a bill (H.R. 2528), the Association Health Plans Act that would amend the Employee Retirement Income Security Act (ERISA) to provide that a group or association of employers would be treated as a single employer if they provide a group health plan that provides coverage to at least 51 employees. The bill would allow self-employed individuals to participate in the plan. The association health plans would be prohibited from either denying coverage or charging a higher premium based on pre-existing conditions. Marcie Strouse, Partner, Capitol Benefits Group testified on behalf of the National Federation of Independent Business and expressed support for association health plans that “can result in lower premiums, stronger networks, and better plan options.” The bill, which has twelve cosponsors, has been referred to the Committee on Education and the Workforce. The House of Representatives passed similar legislation during the last session of Congress, but it was not considered by the Senate.

Portable Benefits Recommendations Released – Senator Bill Cassidy (R-LA), chair of the Senate Committee on Health, Education, Labor, and Pensions (HELP) released a report , “Portable Benefits: Paving the Way Toward a Better Deal for Independent Workers.” According to Senator Cassidy, “Modernizing labor and employment laws will allow independent workers to receive benefits without disrupting the traditional employment model, fulfilling the promise of American labor and employment law.” Senator Cassidy noted that at least 27 million Americans are independent workers and 80% would like access to portable workplace benefits.

Among the proposals in the report are:

• Allowing employers to offer portable benefits to independent workers without the fear of misclassification lawsuits.  
• Establishing a single statutorily defined test that would determine employment status.   
• Increasing health care coverage options for independent workers by providing access to association health plans.
• Raising participation levels of independent workers in retirement plans such as single employee pension (SEP) IRAs, while currently available under federal law only have a 20% participation rate by independent workers.   
  

As chair of the HELP committee, Senator Cassidy is in a position to hold hearings and sponsor legislation on portable workplace benefits.

Neil Reichenberg is the former executive director of the International Public Management Association for Human Resources. He is an attorney, a frequent writer and speaker on public policy and human resource issues, and an adjunct faculty member at George Mason University. For questions or additional information, contact Reichenberg at neilreichenberg@yahoo.com.