On May 20, the Equal Employment Opportunity Commission announced that it will no longer provide funding to state and local EEO agencies for purposes of investigating or prosecuting discrimination charges based on allegations of gender identity or disparate impact discrimination. The EEOC traditionally provides a substantial portion of these agencies' funding, which in turn relieves the federal agency of the need to investigate a large percentage of discrimination charges. For example, the South Carolina Human Affairs Commission handles most of the employment discrimination charges filed in that state.

The ban on funding for gender identity discrimination charges stems from President Donald Trump’s executive order declaring that there are two permanent genders assigned at birth. The EEOC previously announced its intent not to pursue disparate impact discrimination actions, which are based on statistical disparities from workplace policies that are neutral on their face.

This funding decision is likely to face legal challenges from states deprived of federal dollars. Gender identity remains a protected classification under Title VII under the Supreme Court’s Bostock decision. Disparate impact remains a viable legal theory under other federal cases. If the funding ban stands, state agencies will be forced to abandon investigation of these types of discrimination claims or find an alternative source of funding.

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