Law.com: When Civil Rights Law Becomes a Weapon
Aaron Steed and Barry Sturner built their companies from the ground up. Their reward? Facing millions of dollars in fines despite no evidence of wrongdoing. Their cases illustrate how bureaucratic abuse is wrecking small businesses—and how urgently reform is needed.
Aaron Steed runs Meathead Movers, a California moving company with a twist: employees jog when not carrying boxes. It’s efficient, cost-effective, and a huge hit with customers. The company welcomes applicants of all ages, but like most physically demanding jobs (and the moving industry overall), it naturally draws younger workers. Steed started the company as a student-athlete; unsurprisingly, many of his employees are students, too.
That, according to the Equal Employment Opportunity Commission, is a federal offense.
The EEOC is now demanding $15 million. Not because Steed or Meathead Movers turned older applicants away based on their age, and not because anyone claims to have been mistreated. Instead, the EEOC believes the company’s branding could have dissuaded people over 40 from applying. It points to the fact that the company’s workforce skews young. With no evidence of discriminatory intent—and no actual victims—the EEOC has pursued Meathead Movers for 10 years, threatening millions of dollars in fines based on statistical disparities alone.
Barry Sturner faced a similar fate. In 2017, the Consumer Financial Protection Bureau sued his small mortgage company under the Equal Credit Opportunity Act, this time based on alleged racial discrimination. Again, there was no evidence the company denied loans or actually deterred any applicants based on race. Instead, the CFPB pointed solely to demographic data—and to Sturner’s political speech, which it deemed “disconcerting” and assumed contributed to disparities among races. After seven grueling years of litigation, the CFPB finally admitted it had no basis for its claims. But not before Sturner had paid more than $100,000 to settle and hundreds of thousands more in legal fees.
These cases expose a danger at the heart of our civil rights laws. Under disparate impact theory, businesses aren’t judged by whether they treat people equally. They’re judged by whether their outcomes match a bureaucratic ideal. Any deviation—regardless of cause—can trigger years of litigation, overwhelming discovery requests, gag orders, and financial ruin.
The problem is: there are disparities in almost every industry, since each industry reflects the realities of its labor pool. Construction firms, tech companies, fashion brands, and security agencies attract different mixes of individuals. That’s not discrimination. That’s life. Turning natural variation into de facto evidence of discrimination turns the free choices of individuals into legal liability. It punishes, in Steed’s case, a student-turned-entrepreneur who turned a fun idea into a thriving company he hoped to one day turn over to his son.
Disparate impact theory also turns civil rights law into a weapon. In Sturner’s case, the CFPB used disparate impact theory to police speech that it said could be considered “incorrect or insensitive.” Rather than relying on discrimination, the CFPB relied on Sturner’s statements on local crime, law enforcement, and even the CFPB itself—targeting a business that held views the agency didn’t like.
The irony is, by penalizing businesses for innocent imbalances, disparate impact theory encourages those businesses to discriminate intentionally—hiring by quota to protect themselves from liability. Civil rights laws were meant to stop discrimination. Disparate impact theory demands it, presenting equal protection concerns of its own.
Fortunately, there’s growing recognition that this approach presents serious constitutional problems. Justice Antonin Scalia warned in 2009 that disparate impact often forces employers to balance their workforce to avoid potential liability. And if the government can’t discriminate, it certainly can’t mandate that private employers do so either. More recently, President Donald Trump issued an executive order directing agencies to rein in disparate impact enforcement that burdens small businesses and undermines equal treatment.
That’s a step back toward the principles underlying the American Dream: equality before the law and the freedom to build something of your own.
Fortunately for Sturner, he’s nearing the end of his legal battle. After an internal investigation, the CFPB asked a court to reverse the settlement and refund the $105,000 he paid to the federal government. Aaron Steed, meanwhile, remains in the thick of his fight. But with growing public scrutiny, hopefully not for much longer.