A person or business is considered to be "grandfathered in" when they are exempt from new rules and can continue to operate under the existing set of regulations. New rules will then only apply to future cases. Today the term is widely used across various sectors, most notably in real estate and health insurance.
But when the term was first coined in the 1890s, it referred to only one thing: voting rights. After the 15th Amendment was ratified to the U.S. Constitution in 1870 banning the infringement on a citizen's right to vote on account of race, color or previous condition of servitude, some southern states did not readily accept the ruling. Instead they carefully crafted amendments on the state level that circumvented the federal decree to try to keep African Americans from accessing polling stations.
Since the basis of race could no longer be used, the state amendments imposed poll taxes as well as literacy tests. These limits were powerful; close to 30 percent of all voting-age males were illiterate, a majority of whom were poor Black men. But those taxes and tests would also affect poor, illiterate white voters. Thus a grandfather clause was added to allow an illiterate man to vote as long as he or his lineal ancestor (i.e., grandfather) had been a registered voter before 1867 — three years before the passage of the 15th Amendment.
The clauses no doubt suppressed the vote along racial lines, but party lines were at play too. At the time, most African Americans were Republicans (the party of Abraham Lincoln) and most whites were Democrats. Suppressing the vote served to keep power in the hands of the Democrats.
In 1915, the state amendments and clauses were ruled unconstitutional, but the poll taxes weren't eliminated until 1966. That meant decades of continued voter suppression, even after the right to vote was granted to all, including women in 1920, by the Constitution of the United States.
The phrase "grandfathered in" is of course still widely used today without the connotation of disenfranchisement. But even as culture shifts, whether we're aware of it or not, language has the power to hold our history.