What Is Adverse Impact?

In the United States, legal requirements for affirmative action and equal employment opportunity exist to protect against discrimination on the basis of race, color, religion, sex, national origin or disability. These laws also require employers to consider these factors when making hiring decisions. However, there are times when even unintentional adverse impact can occur in hiring.

What Is Adverse Impact?

Adverse impact is the negative effect that a hiring practice, employment test or other selection criterion has on an underrepresented group (such as racial minorities). This concept applies to situations in which there are multiple applicants for the same position and where there is no legitimate business reason for selecting one applicant over another.

For example, if an employer only hires men as police officers because they believe that women are less capable of performing certain tasks required by the job than men are, this would be considered adverse impact discrimination.

When Does Adverse Impact Happen?

Adverse impact occurs when the employment practice causes a significant number of individuals from one group to be excluded from jobs or to be placed at a disadvantage. Adverse impact occurs when:

• A hiring practice excludes members of protected classes from jobs for which they’re qualified; or
• An employment test screens out members of protected classes who could perform well on-the-job; or
• Other selection criteria disproportionately exclude members of protected classes from being hired

The impact is adverse if it is negative, not positive. The term “adverse” refers only to the effect on an individual’s ability to compete for employment or promotion opportunities — not whether the effect was intended by an employer or other responsible party.

In other words, if your company has a policy requiring all employees to wear uniforms while working and there are no exceptions available for religious reasons (or any other reason), then this policy could have an adverse impact on Muslim women who choose not to wear skirts or dresses as part of their religious beliefs because these garments would make them feel uncomfortable.

Why Does Adverse Impact Matter?

Adverse impact is illegal and you should be aware of this concept if you are a business owner. It applies to situations in which there are multiple applicants for the same position and where there is no legitimate business reason for selecting one applicant over another.

Adverse impact discrimination can also occur when certain groups are not hired at all based on their race or gender (or any other protected status). Examples of adverse impact can occur during hiring assessments when the assessment assumes knowledge or potentially enables one group of candidates over the other.

When making hiring decisions, consider race and gender as part of a broader set of factors. While it’s important to avoid adverse impact in your hiring practices, you shouldn’t rely solely on the results of statistical testing when deciding whether or not to hire someone.

Consider how you can avoid adverse impact in your organization’s hiring practices:

• Look at your demographic data and compare the candidate hiring pool to see if there is a reasonably close proportional representation
• Remove any key words related to race or gender in your JDs
• Use competencies and structured interviews

The bottom line is that you need to consider race and gender as part of a broader set of factors when making hiring decisions. This includes things like experience, education level and other qualifications. There should never be just one factor that determines whether an applicant gets hired or not.