Disparate Impact: What It Means, How It Works, and History

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 harms individuals who belong to a legally protected class even though it appears neutral. Put simply, disparate impact is the unintentional discrimination against people in a protected group in areas like employment and housing. U.S. Congress incorporated disparate impact concepts in anti-discrimination laws, including statutes dealing with civil rights, education, housing, and employment.

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. The term is also often referred to as adverse impact. Federal statutes and regulations authorize the use of disparate impact analysis to identify unlawful discrimination.

Disparate impact analysis first received judicial acceptance in cases where voting laws that adversely impacted individuals based on race, color, or ethnic origin were illegal under civil rights statutes. Using disparate impact evaluation to identify discrimination based on these factors or discrimination in housing, employment, credit, education, and other areas based on religion, gender, sexual orientation, age, disability, pregnancy, and other characteristics has generated political controversy.

The invocation of disparate impact to determine discrimination and protect minority rights against discriminatory state actions arose in the civil rights era. Congressional action and judicial decisions have since expanded the use of this analysis beyond racial contexts.

Twenty-six federal agencies have regulations that prohibit discrimination based on race, color, or national origin and incorporate a disparate impact or discriminatory effects standard. The concept’s reach and interpretation, especially concerning adverse effects on racial and ethnic groups, continue to be intensely debated in judicial, legislative, and political arenas.

Evolution of Disparate Impact

Griggs v. Duke Power Co.

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.

Washington v. Davis

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

Although Washington v. Davis denied the disparate impact principle on a constitutional basis, the decision effectively authorized the 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 Black people’s voting strength and thereby violated their rights.

Voting Rights and Fair Housing

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 concerning 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) of 1988 and federal employment discrimination law in the Civil Rights Act of 1991. In both cases, Congress overcame significant opposition; to enact the federal employment amendment, Congress defeated a presidential veto.  

Disparate Impact: Subsequent History

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 the composition of the Supreme Court) have frequently entailed shifts in the interpretation and enforcement of antidiscrimination laws generally and the use of disparate impact standards that consider the results or effects of laws in particular.

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 laws, in particular, opposed such laws and promoted the appointment of conservative judges whose decisions interpreted disparate impact rules narrowly, thereby limiting their utility.

Conservatives concerned about religious freedom and the rights of pregnant individuals and people with disabilities supported disparate impact tests to protect individuals’ rights in these situations. Courts and Congress countered discrimination affecting religious minorities, those who are pregnant, and people with disabilities 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.

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

President Biden affirmed the disparate effect standard in an order to the Secretary of Housing and Urban Development (HUD) in January 2021. He directed HUD to review Trump-era changes to anti-discrimination regulations and take action to ensure fair housing laws are enforced to prevent practices having “an unjustified discriminatory effect.” In 2023, the agency restored anti-discriminatory practices by rescinding the 2020 policies enacted by the Trump administration.

Example of Disparate Impact

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.) 

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.

The Bottom Line

There are laws in place to protect certain groups from discriminatory practices in housing, employment, and other areas. These regulations are put in place to counter both intentional and unintentional discrimination. The latter is known as disparate impact. Although unintentional, it can still lead to dire effects on those who are impacted.