Adverse Impact and the Uniform Guidelines on Employee Selection Procedure

When people refer to an adverse impact in the workplace, they are referring to decisions that are related to hiring, promotion, transfer, retention, demotion, dismissal and referral that have had an unfavorable impact on a particular group of people (race, gender, etc.)

Adverse impact can occur when identical standards or procedures are applied to everyone, despite the fact that they lead to a substantial difference in employment outcomes for the members of a particular group and they are unrelated to success on a job.

There are several methods of measuring adverse impact. One method is the EEOC’s Uniform Guidelines on Employee Selection Procedures, 29 C.F.R. §1607 et seq. (“Uniform Guidelines”).

The uniform guidelines state that a selection rate for any protected class of people (based on race, sex, or ethnic group) which is less than four-fifths (4/5) (or eighty percent) of the rate for the group with the highest rate will generally be regarded by the Federal enforcement agencies as evidence of adverse impact.

Let’s say that 50% of white applicants receive a passing score on a test, but only 30% of Black applicants pass the same test. That would be a ratio of 30/50, or 60 percent, which would violate the 80 percent (four-fifths) rule.

Selection rates of greater than four-fifths will generally not be regarded by Federal enforcement agencies as evidence of adverse impact. However, smaller differences in selection rate may demonstrate an adverse impact on a protected class, especially if an employer’s actions have discouraged applicants disproportionately on grounds of race, sex, or ethnic group.

The Department of Justice, Department of Labor OFCCP, Office of Personnel Management and the EEOC all use the Uniform Guidelines on Employee Selection Procedures [http://www.dol.gov/esa/regs/cfr/41cfr/toc_Chapt60/60_3_toc.htm] to determine how organizations should deal with hiring, promotion, transfer, retention, demotion, dismissal and referral.