Disparate Impact Definition: Why It’s Important

by Sarah Reyes

The twenty-first century gave rise to a workforce that is more concerned over the overall work culture and environment over how high the salary is. According to a study, three out of four workers will consider taking the job if their culture and values coincide with their own and part of a company’s culture and values is diversity.

This article will tackle disparate impact definition and adverse impact definition as well as answer questions about diversity’s antithesis — discrimination, intended or systemic and how such practices are discouraged in fostering a diverse work culture.

What is a Disparate Impact?

To define disparate impact, it is a term with context relating to employment. It occurs when protected members of a group of minorities, such as genders other than males or races other than whites, receive adverse employment treatment versus the majority group. However, this discriminatory practice is unintentional and indirect.

You will see disparate impacts occur in the company policy, practices, and even rules. It would appear that a company’s approach is neutral, but looking into it would make you see that the policy or practice has a disproportionate impact on a minority group and favors a member of certain groups.

An example is in the course of initially testing applicants for job application, and the test results would eliminate persons disproportionately from a protected minority group. Federal laws and the Equal Employment Opportunity Commission or EEOC prohibit this practice of discrimination in employment decisions.

Who is the protected class?

Protected classes are a people group that the EEOC and the law protect from cases of discrimination. It is rooted in Title VII of the Civil Rights Act” that states that employment biases according to race, religion, sex, and national origin is prohibited in all aspects.

Federal, state, and other local laws in each state would also include discrimination against the basis of sexual orientation, gender identity and expression, disability and genetic information, pregnancy, and age are also prohibited and unlawful. In the language of the law, everyone a part of these minority groups is a part of the faction called protected class.

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Disparate Treatment Discrimination And Disparate Impact Difference

Although both of these concepts recognize workplace and employment discrimination, disparate impact and treatment are two sides of the same coin.

Whereas disparate impact is not deliberate and not intentional, disparate treatment is upfront and blatant discrimination against people in the protected class. This is also the most common type of workplace and employment discrimination.

Disparate impact is not deliberate or it is unintentional. Although tests are given as part of the application process for everyone, people included in protected groups are negatively impacted when tallying the results. Let’s say that the tests are given to test the applicant’s reaction time; younger people will have the advantage over older applicants, thus discriminating against more senior workers.

This example would count as a disparate impact and thus make it illegal if the reaction time isn’t necessarily needed for the job being applied. If a hiring manager or any executive can prove that testing reaction times are necessary for doing the job, then the test could be proven to be legal thus not an act with disparate impact.

On the other hand, disparate treatment is intentional discrimination in the company’s rules and practices. An example of this treatment is the weight requirements of airline jobs before 1991 or favoring male applicants over female applicants, which was worse in the past but still happening now in the 21st century.

This disparate impact can also be seen in the sex discrimination that comes with the practice of biased strength tests against women. The Equal Employment Opportunity Commission believes that such exams are illegal since more than dozens of jobs are closed off for women in favor of men at a higher rate.

What is Adverse Impact?

To define adverse impact, it is the same as disparate impact. It’s just another term to describe the unfair and tendentious employment process that discriminates against groups protected by such practices by the law. The adverse impact effect can be seen in screening an applicant’s resume in the application process or far in the decision of not promoting an employee on the basis that connects them to being a member of the protected class, e.g., denying promotion just because a woman is pregnant at that time or disproportionately hiring more employees of a particular color just because.

What is Adverse Impact?


The Four-Fifths Rule and other tests to measure the disparate impact

Aside from adopting the set of rules included in the Uniform Guidelines on Employee Selection Procedures, the Uniform Guidelines also provides the means by which adverse impact is measured, and that is known as the 4/5ths or the 80 percent rule.

To determine whether or not there is a disparate impact on a group, the group that is not selected should at least have 80% or more than the group with the highest rate. There is a disparate impact if the other group doesn’t meet the 80% minimum.

Let’s take the Griggs vs. Duke Power case again. The rate of selection for the African American workers was 6% compared to that of the whites, which was 58%. In order to measure for disparate impact, divide 6% by 58%, and we get 6/58, and 6 divided 58 is 10.3%. 10.3% is leaps and bounds lower than the minimum 80% mandated by the Uniform Guidelines.

To give you an in-depth, step-by-step guide, here’s how to do it in four steps.

The first thing you need to do is find the selection rate for each group. Let’s use the example of two groups of male and female applicants. Divide the number of successful job applicants with each group’s total number of applicants.

Let’s assume that there are five successful applicants out of the ten males and five successful applicants out of the 40 females, then divide them and get the total number. That is 50% for the males and 12.5% for the females.

Step two is determining which group is more favored than the other. The higher the rate, the more positive the employment action is, and for negative actions like terminations and demotions, the more favored group is the group with the lower rate. For our example, the 50% rate of the male applicants is higher than the 12.5% of the female.

The next step is calculating the impact ratio of each group. This step illustrates where the disparities are seen. With our example in mind, we divide the value of the successful female applicant’s rate of .125 over the male’s rate of .5, and we get .25 or 25% when converted.

The last step compares your total score with the minimum rate of disparity impact of 80% and whether or not the total value meets or exceeds 80 percent. In our case, 25% is leaps and bounds lesser than 80% and thus indicating adverse impact in this application scenario.

The Four-Fifths or the 80 percent have been the standard since it was released with the Uniform Guidelines in 1978, and since then, more ways to measure adverse impact have been developed, including the z-test and the “Fisher’s Exact” test. Such a test is standard for Human Resources and should be administered in each of their offices as a part of the company’s yearly hiring evaluation procedures.

Importance of measuring disparate impact

Now that we know what disparate impact or adverse impact is, it’s time to understand the facts and discuss why recognizing it is essential, not just in the realm of employment and the workforce.

Measuring disparate impact can establish liability

Measuring disparate impact in the workplace in processes as early as an application or as late as in consideration in promotion is essential. Courts can hold employers, the company, or any organizations liable and accountable for their blatant or otherwise inconspicuous discriminatory practice when you measure disparate impact.

“Title VII of the Civil Rights Act of 1964” has deemed discrimination based on unfair factors as illegal, but even though there are laws to protect the more vulnerable protected class, these laws are still not as realized as we want them to be.

Holding employers who dabble with such unfair practices is just the right thing to confront the power imbalance that usually underpins the employer and employee relationship. Measuring disparities makes it possible to have this checked, and upholding the law and making sure it is enforced will make employers, companies, and organizations liable for their actions.

Measuring disparate impact can dissuade discriminatory conventions

Disparate impact and treatment— or adverse impact is sadly not only possible in the realm of employment discrimination but also visible in other factions of society from education to housing to lending and many other social domains.

Being able to measure it will expose biases in the form of policies and practice, whether intentional or unintentional, and will make a better world for protected groups overall.

In this day and age, equal access seems like the obvious choice. Compared to the pre-civil rights era, where biases were blatant and unhidden, companies and other practices have become more strategic so that the bad practices are less identifiable.

If proven that there is discrimination, adverse impact, or disparate treatment, companies must defend legally whether the decisions made in hiring, training, benefits, wages, or even firing are justifiable.

Measuring disparate impact can stop future discriminatory practices and can help wipe them out of the future

One of the many ways disparate impact assessments are utilized to recognize discriminatory practices is to call out and prevent them from happening in the future.

Such methods will not only dampen and under-develop the leadership potential of an individual from a protected class but also perpetuate the bias in other groups and other persons as well. This could result in many people being unable to speak up for fear of reprisal in the form of demotion, firing, or worse.

Although speaking out against discrimination is not easy, especially if that person or corporation holds authority over you. Speaking out is essential, and history could prove and have shown that it is.

Take Griggs’s 1971 adverse impact case versus Duke Power Co., for example. The company used to have a policy of segregating their employees by race and designating the lowest paying job to African-American employees.

When Title VII came in, a requirement of a high school diploma and the minimum IQ test were administered instead of the disparate treatment of segregation. It then, in turn, disqualifies a number of worthy African American candidates in the labor department.

This case led to the legal term disparate impact. The court ruled that under Title VII of the Civil Rights Act, any tests that affect the minority protected groups unevenly should be proven essential and related to the job at hand.

Such landmark cases on adverse impact and many more have given rise to the adoption of a set of procedures called Uniform Guidelines on Employee Selection Procedures to address problems under the disparate discrimination umbrella.

This set of rules is the technical basis of all courts in fighting discrimination in all aspects of the employment process. Considerable differences are happening, but there are still so many grounds to cover, and measuring disparities will address those for years to come.

Measuring disparate impact is vital in this age of big data

We are now in the age of technology where we are confronted by big data in all facets of our lives, including life on the interweb, policing, housing, and many more. Although efficient, extensive data mining is unpredictable and, more often than not, has the potential for biases and adverse impact on the more vulnerable protected class.

Initially viewed as being unable to contain human tendencies, big data is only as innocent as the person’s who encode them, and recent studies have shown that algorithms have the ability to inherit biases from their decision makers and also the larger tendencies that are shared by society with its algorithms.

For victims of larger disparate impact due to data mining, the only grasp for them to present their case in the courts is the disparate impact or treatment doctrine. We still have a long way to go in deciding how ethical big data is, but the ability to measure disparate impact recognizes that this is the problem. Thus solutions need to be extended to embrace this fold.

Proving that disparate impact is happening

An adverse or a disparate impact as well as disparate treatment’s difference is integral in knowing what to do if you need to prove whether or not such action is proven to be an act of discrimination.

Whether you are an employer looking to avoid and improve practices on your company or organizations or an employee or an applicant subject to acts of discrimination, here are things to look out for.

How to prove your case of disparate impact

Disparate impact or adverse impact is the harder of the two to prove. Hard evidence, as well as statistical analysis, is needed in order to establish practices that adversely impact a protected class.

·        The first thing is proving that a company or an organization’s employment decision, whether an application or any other faction, has impacted you as a part of the protected class negatively. You need to ensure that you are unfairly treated than the other persons at hand. This is the part where statistical analysis will come in.

·        Your employer then should prove that practices that harmed you have legitimate business reasons. Employers that cannot prove their practices as legitimately valid will have violated Title VII of the Civil Rights Act and thus proving that they have discriminated against a person of a protected class.

·        On the other hand, if the employer has proven that such actions were necessary in order to meet an end, a day in the court is guaranteed. As part of a protected class, you would need to prove that the action that caused adverse impact could have been avoided outside of the employer’s method — that another course of action could have avoided discriminating against you.

How to prove your case of disparate impact


How to prove your case of disparate treatment

On the other hand, in a case of disparate treatment where the discrimination was blatant, deliberate, and hard to miss, a discriminated employee only needs to show that:

·        First, they are members of a protected class, whether they are female, a person of color, pregnant, older, a person with a disability, or any other group in the protected class.

·        Proving that the employer knows that you are a part of a protected class is essential.

·        The next thing is to ensure that the employer or the corporation or organization has harmed you. This could be in the form of not giving you a bonus, firing you without justifiable reason, or not hiring you if you happen to be a job applicant.

·        Another thing is to prove that even though a group of you were harmed, prove that a person not a part of a protected class was treated better.

In turn, the employer would then have to defend and show that their actions were legitimate nondiscriminatory and that a valid and good reason was behind their move. The person in the protected group would then get a chance to prove that their given explanations are just guise and alibis and that the real reason the act was done was to discriminate.

Federal Laws Against Workplace Discrimination

The law protects against disparate and adverse treatment and impact, and here are some rules in place:

Title VII of the Civil Rights Act of 1964 points that discriminating against the basis of race, color, religion, national origin, or sex is illegal and prohibited. It also gives protection to employees who filed a case against the employers with regards to workplace discrimination.

The Pregnancy Discrimination Act is a clause added to Title VII effective in 1978. This amendment expanded the definitions of sex to include the illegality of discrimination against pregnancy and childbirth or anything in between concerning both.

The Equal Pay Act of 1963 deemed sex-based wages as discrimination against women when both sexes work and are given the same tasks with the same roles.

The Age Discrimination in Employment Act of 1967 protects older employees 40 years and older against discrimination based on age.

Title I of the Americans with Disabilities Act of 1990 protects our brothers and sisters with disability in the workplace or any place in the realm of employment.

The Equal Employment Opportunity Commission has these laws as their benchmark in upholding and enforcing against discrimination in the workplace.

Aside from these federal laws, state laws may apply as an added blanket that protects against employers. If a state does not explicitly state a protected case in its rules about workplace discrimination, a worker or employee would have to appeal and refer to the federal laws written above.

Federal Laws Against Workplace Discrimination


Importance of Suing for Employment Discrimination

The number one reason to pursue legal action in terms of workplace discrimination is the tenet that everyone should be treated fairly and equally.

The factor that should matter is a worker’s skills and ability and not other irrelevant factors out of an applicant’s control — and this is only for workers seeking jobs.

Women can be unfairly laid off or treated differently once they become mothers, and for some, once they decide to have none, which could lead to wrongful termination or exempting you from a promised promotion just because. This is unnecessary stress given to employees, which could lead to physical and mental health concerns, and enterprises and employers should avoid such practices to avoid costly financial and morale loss in their company or organizations.

In relation to health concerns on the employees, winning a discrimination case will not only take their power back, but they could also win damages that could help them in hospitals or psychological fees.

As for people who are terminated with proven disparate impact or treatment, they could receive back pay and other benefits. While people who are proven to be wrongfully denied work can win job placements and the same goes for people looked over for promotions.

What can employers improve on to fight disparate impact?

To avoid isolating a part of their team or unwittingly discriminating against a person part of a protected class, proactive changes should be imposed. Here are some considerations for employers on how to do that.

First is making sure that their companies or organizations are fostering diversity on all hierarchical levels and making sure that persons of color are not underrepresented. This measure could be done by hiring and promoting deserving employees of the protected groups.

This includes hiring more women, more persons of color, members of the LGBTQIA+, and persons with disabilities. Not only will they solve the diversity problem, but studies have proven that a diverse workforce promotes more creativity in decision-making.

Having inputs all around because of various cultures and backgrounds will allow this. There is also an increase in productivity with the number of different ideas from different sides that the company will generate.

Concerning this, current employees responsible for the hiring process should be considered to attend and train in workshops that tackle unconscious bias. One should be open to everyone and less biased for your diverse company to flourish.

Ensuring that your employees who are part of the protected groups are also treated fairly in wages is essential. Ensure that the disparity is justified and rooted in job-related decisions and not personal prejudice and favoritism.

The questions about salary histories could perpetuate this problem. They could lead to different pay for the same functions initially, which are grounds for laws on disparate impacts and are illegal in some states.

In a data-driven century and age, employing statistical analysis in your practices can not only make things easier for assessment but will also show you where you are going wrong about disparity practices in your office.

This will not only be a proactive move in terms of future claims and lawsuits concerning disparate impacts or treatment. It will also point you where you need improvement, for example, using analytical data to analyze whether pay for your employees is being decided by race or gender, or even age.

Employers are sometimes hesitant to employ statistical analysis for fear that results will be used against them. Still, if you take the results and make changes to not only avoid future litigations but also proactively make moves to adopt a more diverse workforce, then it is a win-win situation for both.


Disparate impacts and treatments, when avoided, make happy employees and also no financial loss of any kind for the employers. Measures as simple as revisiting and revising policies and dogmas that were once normal but unintentionally hurt employees from protected groups, whether present or potential, should be done. It’s the twentieth century, and how lucky we are that the norm is now inclusivity, which is only what is expected. Not just to have a booming business and work environment but to foster a better world overall.

Hope you learned something from this article on adverse and disparate impact definitions and other information relating to these important topics.

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