Thomas Perez, the "Disparate Impact" Crusader

The idea of “disparate impact” is an abomination that has taken root in the business world and is being pushed into other sectors as well, such as housing and labor. This idea holds that “a defendant can be held liable for discrimination for a race-neutral policy that statistically disadvantages a specific minority group even if that negative “impact” was neither foreseen nor intended. In such cases, defendants can be forced to pay for harm caused not by their own actions, but by economic and statistical realities, even if beyond their control.”


If we do not focus on substantially curbing or ending it, it will continue to grow, extorting huge sums from innocent companies and parties, creating an enormous economic burden on society, and allowing the tort bar to run amok. Yet it is vigorously being expanded by one man in particular: Thomas Perez.

There are many areas in business where charges of “discrimination”, often regarding race, could and are being made every day. Employment and mortgage origination are two of the most prevalent. The law requires — as it should — that for a company to be guilty of such discrimination, there must be an intent to discriminate.

But government agencies have found a way to overrule that requirement by developing the idea of “disparate impact”. Disparate impact allows if a protected class of citizens has a statistically lesser representation with respect to a business (hiring, mortgages origination, etc) it may be implied that the business has intentionally discriminated — because there is an adverse impact as a result. This is clearly irrational, since there may be many economic, societal, and local reasons for the particular statistical representation. Unfortunately, disparate impact puts the burden to show lack of discrimination on the employer, meaning he is guilty until proven innocent. In fact, in order for an employer to defend himself against such a charge, he would have to show that the “offending rule or practice” was a “business necessity”.


The current administration has been keen on applying disparate impact theory to a number of private companies, and appears intent on ramping up the practice. For example, Obama’s current Labor Secretary, Thomas Perez, had been particularly lucrative in this regard while serving as the Assistant Attorney General for the Civil Rights Division of the United States Department of Justice, his position prior to joining Obama’s cabinet. Last summer, National Review Online (NRO) covered some of Perez’s cases in recent years in his role of , noting that Perez “has applied that theory vigorously to force large settlements from financial companies even in cases where there was no evidence of actual racial discrimination”. In other words, employers can be sought after for violating the law, whether or not there was actual intent.

The White House in general, and Perez in particular, like disparate impact theory because it, as NRO noted, it “sets a very low bar for proving discrimination. Under it, prosecutors need not prove intent, merely that minorities have suffered a disparate impact from some action”.

This is the person who is currently the front-runner for Attorney General to succeed Eric Holder.

The Wall Street Journal has taken note of Perez’s penchant for “disparate impact” as well, calling it “Mr. Perez’s most controversial, and constitutionally questionable, position”, “as a measure of discrimination. According to this theory, if fewer blacks or Hispanics are hired than their percentage of the “relevant” population, then the employer must have discriminated, even if all hiring procedures were fair and racially neutral.” Again, intent need not actually be proven, but merely the affect of a practice or policy is enough to gain the attention of disparate impact advocates.


Current labor leaders have expressed unease with the possibility of now-Labor Secretary Thomas Perez assuming the role of AG, as his bias is pervasive:

“Ryan Williams of Worker Center Watch said that the labor secretary’s brief stint at the Labor Department has been defined by divisiveness and political ideology, rather than effective leadership or unbiased regulation. He pointed to the department’s funding of union front groups known as worker centers as an example of his bias.

“Perez has been charged with enforcing existing labor law. Unfortunately, he’s chosen only to enforce the law when it applies to employers, not to the Administration’s union allies,” Williams said in a release. “While the politicization of federal agencies is running critique of the Obama administration, the Justice Department is the one agency that should remain above the fray of politics, and Perez has demonstrated that he is incapable of serving as a neutral arbiter of the law.”

Patrick Semmens, a spokesman for the National Right to Work Foundation, said that Perez’s record gives no indication that he will abandon his politics to administer the law in a neutral manner.

“Tom Perez as Attorney General is a scary thought. If Perez is allowed to operate the Department of Justice the way he has run the Labor Department, he will consistently put the priorities of the president’s key political backers ahead of the rights of regular Americans,” he said.”


Housing is another area where “disparate impact” theory has entered the arena more frequently. In 2013, “The U.S. Department of Housing and Urban Development issued a regulation on “disparate impact,” codifying a long-used legal precedent that says the Fair Housing Act prohibits practices that result in discrimination “regardless of whether there was an intent to discriminate.”

A challenge to “disparate impact” policy in housing has been given the green light by the Supreme Court earlier this month, the third time to do so in the last 2 years. But the Obama administration has been so desperate to keep SCOTUS from potentially ruling against it, it vigorously mounted pressure to have the prior cases dropped. Guess who was the key player in the first case? Thomas Perez. Both the WSJ and The Weekly Standard covered this extensively, noting how Perez “made a Supreme Court case disappear”.

Forbes describes the deals more in depth: “The disparate-income case the Obama administration scuttled also had perverse implications for the supposed victims of discrimination. In Magner v. Gallagher, antidiscrimination advocates accused Minneapolis of reducing the stock of affordable housing for minority residents by aggressively enforcing housing codes. Those codes, of course, also benefit poor residents by insuring their dwelling units are safe. In the end, future Labor Secretary Thomas Perez, then an assistant U.S. Attorney, flew to Minneapolis and worked out a settlement to prevent the case from being heard.


In the second challenge, Twp. of Mount Holly v. Mt. Holly Gardens Citizens in Action, the Soros-funded Open Society Foundation, Ford Foundation and other groups contributed money to a developer to provide low-income housing units and settle a lawsuit challenging the New Jersey city’s redevelopment program.”

For the newest case to be heard next year, Texas officials were “sued under the U.S. Fair Housing Act over tax credits for low-income building projects. The question is whether people can sue by showing a practice had a “disparate impact” on racial minorities, or whether they must meet a higher standard by proving intentional bias.” That will be decided on next year. Will Thomas Perez be the next Attorney General by then?

The battle for Thomas Perez will wait until after midterm elections. He follows the footsteps of Eric Holder in theory and tactic and expanding “disparate impact” theory is one of his most important gimmicks. This is one fight that should be watched closely.


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