SHRM Adverse Impact Calculator

SHRM 4/5ths Rule:

\[ \text{Ratio} = \frac{\text{Selection Rate of Protected Group}}{\text{Selection Rate of Majority Group}} \]

Protected Group Selection Rate:

Majority Group Selection Rate:

Ratio (4/5ths Rule):

Adverse Impact:

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1. What is SHRM Adverse Impact Analysis?

The SHRM (Society for Human Resource Management) adverse impact analysis uses the 4/5ths rule (80% rule) to identify potential discrimination in employment practices. This statistical method helps organizations ensure fair hiring, promotion, and other employment decisions.

2. How Does the 4/5ths Rule Work?

The calculator uses the 4/5ths rule formula:

\[ \text{Ratio} = \frac{\text{Selection Rate of Protected Group}}{\text{Selection Rate of Majority Group}} \]

Where:

\( \text{Selection Rate} = \frac{\text{Number Selected}}{\text{Total Applicants}} \times 100 \)
\( \text{Protected Group} \) — Minority or protected class group
\( \text{Majority Group} \) — Non-protected or comparison group
\( \text{Ratio} < 0.8 \) indicates potential adverse impact

Explanation: The 4/5ths rule states that if the selection rate for a protected group is less than 80% of the selection rate for the majority group, adverse impact may exist.

3. Importance of Adverse Impact Analysis

Details: Regular adverse impact analysis helps organizations comply with equal employment opportunity laws, identify potential discrimination, and promote diversity and inclusion in the workplace.

4. Using the Calculator

Tips: Enter the number of selected applicants and total applicants for both protected and majority groups. Ensure all values are positive integers and total applicants are greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What constitutes a protected group?
A: Protected groups include race, color, religion, sex, national origin, age (40+), disability, and genetic information under federal EEO laws.

Q2: Is adverse impact the same as discrimination?
A: No, adverse impact indicates potential discrimination that requires further investigation. It doesn't automatically prove discriminatory intent.

Q3: What sample size is needed for reliable analysis?
A: Generally, at least 30-50 applicants per group is recommended for statistical reliability, though smaller groups can still indicate trends.

Q4: What if the ratio is exactly 0.8?
A: A ratio of exactly 0.8 or higher generally indicates no adverse impact, but organizations should still monitor closely.

Q5: Are there other statistical tests for adverse impact?
A: Yes, statistical significance tests like chi-square or Fisher's exact test may provide additional insights beyond the 4/5ths rule.