Disparate impact issues may be the big “Gotcha”

Try to avoid the effects of adverse impact discrimination.
Try to avoid the effects of adverse impact discrimination.

Everyone knows about discrimination. Everyone in HR can identify cases of disparate treatment. Those are cases where someone is treated differently specifically because of a protected characteristic, such as age, sex, or disability. HR is good at making sure those cases don’t happen, or if they do they are taken care of in short order. What about a situation where someone claims they were discriminated against as the result of a policy or process you thought was unbiased?

Disparate impact

Disparate impact is the “unintentional” part of discrimination, much the same way hostile environment harassment is in sexual harassment. You are doing something that was not intended to discriminate but ends up having an impact on some protected category of employee. Let me give you an example.
You are having a reduction-in-force (RIF) and you have to cut your payroll budget. You can do that a couple of ways. You can get rid of new employees in a last in, first out type of decision, or you can look at your higher wage employees to cut your budget and lose fewer employees that way. Either way appears neutral on the surface but may cause you problems. You may have recently hired nothing but women and turning around and terminating nothing but women may seem discriminatory. Or if you are considering nothing but high wage workers you are probably looking at workers over 40 years old. Letting all the “old people” go may seem on the surface to be discriminatory. Certainly to one of those workers in those groups it may seem that way. How do you know if you have engaged in disparate impact?

80% rule

The Uniform Guidelines on Selection Procedures says that the selection rate for a minority group must be at least four fifths or 80% of the majority group to be neutral and safe from being considered disparate impact. Attorneys Kate Bischoff and Judith Langevin of Zelle say “In order to avoid liability in a disparate impact case, the employer must demonstrate that the policy, practice, or standard in question is job-related and a business necessity.” They further say:

If the initial review of the likely results of the action or policy suggests that women, people of color, or employees over 40 will be impacted the most, employers should pause and do the following:

  • Carefully review the circumstances to see if patterns are evident. Is a particular supervisor recommending the selection of more women than men for a RIF? Is a new policy a reaction to circumstances better addressed directly? Are selection standards being uniformly applied?
  • Consider doing a statistical adverse impact analysis to determine the extent and legal significance of the disparate impact on protected groups.

 Why is this important?

Adverse impact cases generally involve much larger number of people than are involved in adverse treatment cases and subsequently the monetary penalties are much higher. As Bischoff and Langevin say “They are expensive to defend and the judgments paid by employers who are found to have engaged in disparate impact discrimination can be large.”
If you look at your number and something seems amiss it behooves HR to take a much closer look at the activities and reasons for the job actions. Just because you find adverse impact does not mean you have done something wrong but it certainly indicates you should look and analyze further.

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