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Similar to unconscious bias, adverse impact can result in fewer qualified minorities being hired for discriminatory reasons.
The difference is that adverse impact is a legal requirement for US employers with 15 or more employees (20 employees for age discrimination cases) to remain compliant with their recruiting.
Here’s everything you need to know to avoid adverse impact during your recruiting.
Disclaimer: This guide does not replace legal counsel nor your own due diligence.
The U.S. Equal Employment Opportunity Commission defines adverse impact in hiring as:
You may have heard about the 4/5th rule. The EEOC Guidelines state that adverse impact is calculated by applying the 4/5th or 80% rule:
An example of adverse impact are background checks for a certain group of candidates, but not another. An employer may have what they believe is a logical reason for checking the backgrounds of applicants from Group A and not Group B.
However, this action can result in adverse impact if more qualified candidates of group A are eliminated due to this background check, and more candidates from group B are hired.
So how do you avoid this type of discrimination when recruiting? The first step is to understand which federal laws and regulations affect you.
One of the most important organizations for U.S. employers is the Equal Employment Opportunity Commission (EEOC). The EEOC oversees adverse impact cases as well as the federal government’s equal employment opportunity program.
The U.S. Equal Employment Opportunity Commission (EEOC) is “responsible for enforcing federal laws that make it illegal to discriminate against a job applicant” because of:
Employers with 100 or more employees, and federal contractors or subcontractors with 50 or more employees and a contract of at least $50,000, need to submit an annual Employer Information Report EEO-1: a survey of employee data by race/ethnicity, gender, and job category.
As part of the Department of Labor, the goal of the Office of Federal Contract Compliance Programs (OFCCP), is to “protect workers, promote diversity, and enforce the law” among companies that do business with the federal government.
The OFCCP enforces compliance with the legal requirement to take affirmative action and recruit:
The general goal of affirmative action is that an employer’s workforce will reflect the gender, racial, and ethnic profile of the labor pools from which the employer recruits and hires.
The OFCCP also forbids hiring discrimination on the basis of:
Employers that fall under the OFCCP include:
If you’re in Canada and operate a company in an industry that’s regulated by the federal government, you need to understand the Canadian Human Rights Commission (CHRC).
In Canada, adverse impact would fall under hiring discrimination. The CHRC defines discrimination as “an action or a decision that results in the unfair or negative treatment of a person or group, for reasons such as their race, age or disability.”
Under the Canadian Human Rights Act, employer cannot discriminate based on:
Employers that fall under the domain of the CHRC for discrimination are:
Similar to affirmative action, the CHRC also enforces employment equity which is a program that “requires employers take actions to ensure the full representation of members of the four designated groups within their organizations” and ensures no person in the four designated groups “shall be denied employment opportunities or benefits for reasons unrelated to ability.”
The four designated groups are:
Employment equity practices include:
Employers that fall under employment equity requirements include:
Similar to the EEO-1, reporting requirements states every private sector employer that falls under employment equity needs to file an annual report on their employees including data on:
If your organization collects demographic data on the race, sex, and ethnic group of your applicants, technology like Ideal can ignore these demographics during its sourcing and resume screening and then test for adverse impact based on the 4/5th rule.
Your organization is required to collect demographic data on the race, gender, disability status, and veteran status of your applicants. Ideal can analyze the sourcing and screening rates for these groups and remove any identified bias to remain OFCCP-compliant.
If your organization collects demographic data on the four designated groups of women, aboriginal peoples, persons with disabilities, and members of visible minorities, Ideal can assess the sourcing and screening rates for these groups and remove any identified bias.
In most cases, you need to understand the laws and regulations around recruiting based on your company’s size.
Note: The regulations listed below pertain only to recruiting and hiring and does not cover all laws and regulations for HR.
The FLSA is a federal law which establishes minimum wage and child labor standards affecting full-time and part-time workers in the private sector and in federal, state, and local governments.
Exemptions from minimum wage exist for employees employed as bona fide executive, administrative, professional, computer and outside sales employees.
This law requires you to only hire people who are legally eligible to work in the U.S. and mandates the use of Form I-9 for verifying the employment eligibility of your hires.
The EPA prevents pay discrimination by requiring equal pay for men and women for equal work in jobs which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except when pay is based on:
The USERRA mandates returning service-members are reemployed in the job that they would have attained had they not been absent for military service, with the same seniority, status, pay, rights and benefits.
It also requires that reasonable efforts (such as training or retraining) be made to enable returning service members to refresh or upgrade their skills to help them qualify for reemployment.
The EPPA prohibits most private employers from using lie detector tests (e.g., a polygraph) during pre-employment screening.
15 employees is when the EEOC starts to regulate whether adverse impact is occurring at your company.
The EEOC enforces Title VII, which makes it illegal to fail or refuse to hire any individual because of his or her race, color, religion, sex, or national origin.
The ADA prohibits discrimination against people with disabilities during recruiting and hiring and covers employers’ obligation to provide reasonable accommodations to qualified job applicants with disabilities (e.g., making materials available in Braille or large print, providing screen reader software).
The EEOC enforces Title II of GINA, which makes it unlawful to discriminate against applicants because of genetic information (e.g., an individual’s genetic tests, family medical history).
The EEOC states, “An employer may never use genetic information to make an employment decision because genetic information is not relevant to an individual’s current ability to work.”
The ADEA forbids an employer from failing or refusing to hire a person or otherwise discriminating against people aged 40 and older during hiring.
For federal contractors and subcontractors, employers must follow an affirmative action program to recruit:
According to the DOL, “employers with a written affirmative action program must implement them, keep them on file, and update them annually.”
The annual EEO-1 report is a survey of employee data by race/ethnicity, gender, and job category for:
Be sure to bookmark this page as a resource for avoiding adverse impact during recruiting!