How Do You Calculate Adverse Impact

Adverse Impact Ratio Formula:

\[ \text{Adverse Impact Ratio} = \frac{\text{Selection Rate Minority}}{\text{Selection Rate Majority}} \]

Minority Candidates Selected:

Total Minority Candidates:

Majority Candidates Selected:

Total Majority Candidates:

Adverse Impact Ratio:

Result:

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1. What is Adverse Impact?

Adverse Impact refers to a substantially different rate of selection in hiring, promotion, or other employment decisions that works to the disadvantage of members of a race, sex, or ethnic group. It is a key concept in employment discrimination law under EEOC guidelines.

2. How Does the Calculator Work?

The calculator uses the Four-Fifths Rule (80% Rule):

\[ \text{Adverse Impact Ratio} = \frac{\text{Selection Rate Minority}}{\text{Selection Rate Majority}} \]

Where:

\( \text{Selection Rate Minority} = \frac{\text{Minority Candidates Selected}}{\text{Total Minority Candidates}} \)
\( \text{Selection Rate Majority} = \frac{\text{Majority Candidates Selected}}{\text{Total Majority Candidates}} \)

Interpretation: If the ratio is less than 0.8 (80%), adverse impact is indicated, suggesting potential discrimination in the selection process.

3. Importance of Adverse Impact Analysis

Details: Regular adverse impact analysis helps organizations ensure fair hiring practices, comply with equal employment opportunity laws, and identify potential biases in selection processes before they become legal issues.

4. Using the Calculator

Tips: Enter the number of candidates selected and total candidates for both minority and majority groups. Ensure all numbers are positive integers and selection numbers do not exceed total numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the Four-Fifths Rule?
A: The Four-Fifths Rule is a guideline from the Uniform Guidelines on Employee Selection Procedures stating that a selection rate for any group that is less than 80% of the rate for the group with the highest rate indicates adverse impact.

Q2: Does adverse impact always mean discrimination?
A: No, adverse impact indicates statistical disparity. Employers can defend against claims by showing the selection procedure is job-related and consistent with business necessity.

Q3: What groups are protected from adverse impact?
A: Race, color, religion, sex, national origin, age (40+), disability, and genetic information are protected under federal laws.

Q4: How often should adverse impact analysis be conducted?
A: Organizations should conduct analysis regularly, especially after significant hiring events, and annually as part of compliance audits.

Q5: What if my ratio is exactly 0.8?
A: A ratio of exactly 0.8 is generally considered the threshold. Ratios below 0.8 indicate adverse impact, while ratios at or above 0.8 typically do not.