Quick Hits
- The rule would withdraw what the EEOC describes as the UGESP’s “interpretive” portions, which likely include its guidance on identifying adverse impact and validating employment tests and other selection procedures. The UGESP’s recordkeeping requirements are subject to a separate, earlier-stage proposal.
- The final rule’s text is not yet public, and current legal obligations generally remain in place until a final rule is published in the Federal Register and takes effect.
- Disparate impact liability arises under Title VII of the Civil Rights Act of 1964 itself, so rescinding the guidelines would not, on its own, eliminate potential legal claims or exposure.
What It Is
The UGESP has been the federal government’s principal guidance on validating selection procedures since the EEOC, the U.S. Department of Labor (DOL), the U.S. Department of Justice (DOJ), and the Civil Service Commission adopted it in 1978. The final rule (RIN 3046-AB43) would remove the interpretive portions of the EEOC’s version. Those portions tell employers how to show that a procedure with adverse impact is nonetheless job-related and consistent with business necessity.
The rule is the latest step in a broader federal rollback of disparate impact enforcement, consistent with the administration’s priorities. In June 2026, the DOJ’s Office of Legal Counsel issued an opinion, which reflects an executive branch legal position rather than a statute or court decision, concluding that the UGESP embraces an unconstitutional reading of Title VII to the extent it contemplates liability based on disparate effects alone. The opinion also treats common selection procedures, such as background checks and aptitude tests, as presumptively job-related and would require plaintiffs to prove causation and identify an equally effective alternative that causes less disparate impact.
The Office of Personnel Management (OPM) then issued an interim final rule removing UGESP references from federal civil service regulations, effective July 31, 2026. In August 2026, the DOL published a final rule rescinding the Executive Order 11246 regulations, which removes the Office of Federal Contract Compliance Programs’ (OFCCP) version of the UGESP at 41 C.F.R. Part 60-3, effective October 26, 2026. For private-sector employers, the EEOC’s version is the one that matters most, because it is the codification that remains in effect for them.
A separate EEOC proposal (RIN 3046-AB45) would rescind the UGESP’s recordkeeping requirements, including the obligation to retain validation documentation and data permitting analysis of selection procedures by race, sex, and ethnicity. That proposal has not yet been issued for public comment and must still go through the notice-and-comment process. How the two rules will interact is not yet clear, particularly because the EEOC has indicated that its UGESP information collection will be discontinued once the final rule takes effect. Together with the EEOC’s pending proposal to eliminate EEO-1 reporting, rescinding the UGESP recordkeeping requirements could remove the primary federal mandate to collect applicant demographic data, although some state and local requirements would remain. Employers would still be subject to the EEOC’s general records retention rule at 29 C.F.R. 1602.14, which is not part of either UGESP action. Recent EEOC settlements in which the agency relied, in part, on workforce data and alleged that employers failed to keep hiring records show that records continue to matter in intentional discrimination cases.
Who Is Affected
The UGESP applies broadly to tests and other selection procedures used as a basis for any employment decision. The rescission is most relevant to employers that use tests, assessments, structured interviews, or artificial intelligence (AI) tools to assist with hiring, promotion, or other employment decisions.
Multistate employers may face different expectations by location. Fourteen state attorneys general recently issued joint guidance affirming that disparate impact liability remains enforceable. New Jersey has adopted rules codifying disparate impact liability that address automated employment decision tools. Illinois has amended its Human Rights Act to prohibit the use of AI that has a discriminatory effect, and, effective June 1, 2027, to codify disparate impact liability in employment more broadly.
Why It Matters
Under Title VII, an employer whose selection procedure causes a disparate impact must still show the procedure is “job-related for the position in question and consistent with business necessity.” 42 U.S.C. § 2000e-2(k)(1)(A)(i); see also Griggs v. Duke Power Co., 401 U.S. 424 (1971). Rescinding the UGESP removes the roadmap many employers have relied on to meet that burden, not the burden itself.
Federal agency enforcement of disparate impact claims may be limited, given 2025 executive branch directives targeting disparate impact and the DOJ’s view that liability based on disparate effects alone raises constitutional concerns. Private plaintiffs, however, can still bring disparate impact claims under Title VII, and state agencies can pursue them under state law. Some states are also moving in the other direction. As noted above, some states, including New Jersey and Illinois, are moving in the other direction. Courts may continue to treat the UGESP’s validation principles as persuasive, given that those principles rest on decades of validation science and precedent of the Supreme Court of the United States. Professional standards, such as the Society for Industrial and Organizational Psychology’s Principles for the Validation and Use of Personnel Selection Procedures, are not affected by the rescission.
The change may be especially relevant to AI tools used to assist with employment decision-making. Some vendor bias audits and validation reports may rely on UGESP concepts, such as the “four-fifths rule,” under which a selection rate for one group that is less than 80 percent of the rate for the group with the highest rate is generally regarded as evidence of adverse impact. Illinois’s AI law and New Jersey’s rules also address these tools directly. Employers relying on those tools may wish to understand how their vendors’ analyses are structured and whether they will change.
Next Steps
Because the rule is not yet final, current obligations generally remain unchanged. As the rescission approaches, employers may wish to consider the following questions:
- Which selection tools are in use, and which have existing validation studies?
- Do contracts or audit reports for AI tools used in employment decision-making reference the UGESP or its adverse impact measures?
- Do internal policies, training materials, or vendor agreements cite the UGESP and need review once the rule is final? OPM noted that federal agencies may need to update similar materials.
- How would any change to testing validation or data collection practices interact with obligations that remain in force?
- Are validation and workforce records still relevant to defending potential claims, and could changes to retention practices raise spoliation concerns?
- Would adverse impact analyses benefit from being conducted at the direction of counsel to help preserve attorney-client privilege?
Employers will likely wish to carefully strategize before making changes to their selection procedures, validation practices, or recordkeeping. Developments to watch include the following:
- OIRA clearance and a Commission vote to publish the final rule in the Federal Register
- The effective date and the EEOC’s stated rationale in the final text
- Whether the recordkeeping proposal (RIN 3046-AB45) is issued for public comment, and on what timeline
- The status of the EEOC’s UGESP information collection, currently approved through June 29, 2029, which the EEOC is expected to discontinue once the final rule takes effect
- State and local requirements on data collection, AI tools used in employment decision-making, and disparate impact enforcement
- The EEOC’s move to rescind its 2012 enforcement guidance on employers’ use of criminal records, another sign of the agency’s retreat from disparate impact.
- Enforcement activity in the fourteen states whose attorneys general issued joint disparate impact guidance, including actions targeting AI-related practices
- The effect of the December 2025 executive order asserting federal preemption over AI regulation with regard to state rules governing AI tools in employment
Ogletree Deakins’ Artificial Intelligence and Innovation, Diversity, Equity, and Inclusion Compliance Practice Group, Government Contracting and Compliance Practice Group, and Workforce Analytics and Compliance Practice Group will continue to monitor developments and will provide updates on the Artificial Intelligence and Innovation, Diversity, Equity, and Inclusion Compliance, Employment Law, Government Contracting and Compliance, Multistate Compliance, and Workforce Analytics and Compliance blogs as additional information becomes available.
This article and more information on how the Trump administration’s actions impact employers can be found on Ogletree Deakins’ Administration Resource Hub.
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