Adverse Impact

What Does Adverse Impact Mean?

When employment practices or rules seem neutral but have a disproportionately unfavorable impact on a group that shares a protected trait, it is said to have an adverse impact. Protected traits consist of race, color, religion, gender identity, sex, sexual preference, pregnancy, country of origin, age, disability, information on genetics, and more.

Employee selection policies and procedures used in recruiting, training and development, promotions, terminations, transfer, and performance evaluations may have an adverse impact, often known as a disparate impact. It could be a component of the entire process, like hiring, or just one step of it, like pre-employment testing.

Applying federal anti-discrimination employment legislation in the US is the responsibility of the Equal Employment Opportunity Commission (EEOC). A considerably different rate of selection in hiring, promotion, or other employment decisions that works to the detriment of members of a race, sex, or ethnic group is referred to as an unfavorable impact by the EEOC.

Why is it Important to Understand Adverse Impact?

Given the level of knowledge surrounding diversity, equality, and inclusion (DEI) in the workplace, the majority of firms can quickly identify an HR procedure or policy that is overtly discriminatory. However, adverse influence is typically inadvertent and necessitates a more subtle understanding. We must examine a policy's or process's outcome rather than its purpose in order to spot a negative impact.

Your organization becomes susceptible to discrimination lawsuits when there is a negative impact, which may be very time-consuming and expensive to fight against or settle. Beyond these possible legal repercussions, however, being aware of negative impact guarantees your HR procedures are fair and equal and will help you create a diverse and inclusive workforce.

Examples of Adverse Impact

Job postings

You should just list the essential, bare minimum prerequisites for a position in your job postings. For instance, you shouldn't list physical qualifications for an administrative position in a job advertisement. A requirement like that might be harmful to some protected groups of people. A physical criterion is not necessary for the job and is not related to it. In contrast, a physical criterion listed in a job description for a fireman is probably necessary for performing the position's duties.

Resume screening

When initially reviewing resumes, it's crucial to assess whatever technologies you utilize. For instance, a piece of resume software may not have been trained to recognize foreign universities, erroneously excluding candidates with foreign education.

Pre-employment testing

Pre-employment tests are frequently used by businesses as a part of the hiring procedure. Reviewing these is necessary to make sure they won't have a negative effect.

Performance reviews

It's crucial to look into these procedures for any negative effects if you utilize similar testing to determine performance reviews and prospective promotions.

Conclusion

Your employment policies and processes could seem neutral, but you should look more closely at them to see whether there could be any unfavorable effects. People with protected traits like race, sex, or gender may be disproportionately negatively affected by an undesirable impact, despite the fact that this is sometimes unintended.

You can examine your personnel selection processes using the 80% rule to see if there are any negative effects and address any issues. Understanding unfavorable impact not only safeguards your company from potential legal claims, but also guarantees that you're creating and promoting a diverse, equal, and inclusive workforce.