What is disparate impact?

The first step to preventing disparate impact is to learn more about it. In this glossary post, we cover the definition of disparate impact, how it relates to your talent acquisition strategy, and examples of disparate impact in the workplace.

What is disparate impact?

Put simply, disparate impact is unintentional exclusion or discrimination. It’s when a process looks neutral on the surface but ends up harming a large group of people. Disparate impact is also known as adverse impact or adverse effect.

Here’s a more detailed definition of disparate impact: a seemingly impartial rule, law, regulation, or requirement that disproportionately harms legally protected classes. As a reminder, it’s illegal to discriminate based on:

  • Race
  • Color
  • Religion
  • Sex (this includes pregnancy, sexual orientation, and gender identity)
  • National origin
  • Genetic information (including family medical history)
  • Disability
  • Age (40 or older)

Employment, housing, and education are all subject to disparate impact. When it comes to hiring, disparate impact can occur at any stage of the process. Even when hiring teams have no discriminatory intent, it’s important to mitigate adverse impacts too.

Disparate impact vs. disparate treatment in hiring

While disparate impact is when neutral policies have negative effects, disparate treatment is outwardly unfair treatment. Both contribute to unfair hiring practices, though disparate treatment is more direct.

One example of disparate impact in the workplace is when employers only offer unpaid internships. While not discriminatory on the surface—organizations aren’t going out of their way to exclude anyone—this disqualifies candidates who can’t rely on their parents to cover living expenses. Because of this, people from economically disadvantaged backgrounds miss out on opportunities to advance their careers, negotiate future salaries, and network. Unpaid internships have been shown to marginalize BIPOC candidates and women.

On the other hand, disparate treatment is intentional discrimination. It refers to policies, tests, offerings, or processes that benefit some groups of people while actively disadvantaging others. For example, disparate treatment would be deciding to interview one person over another because a recruiter prefers their age or gender. They believe that an older male would make a better employee than a nonbinary employee in their twenties. This isn’t based on fact, but bias. It’s both sex-based and age discrimination. A biased hiring process harms people and prevents companies from finding the best candidates for open positions.

What are common examples of disparate impact in hiring?

Let’s explore a few examples of disparate impact to round out our understanding.

Strict criminal background checks

One example of disparate impact comes from strict background checks. It might seem reasonable to require background checks on new employees, and many organizations perform them. However, relying too heavily on them puts formerly incarcerated candidates at a disadvantage. Even if they are well-qualified, rehabilitated, and trustworthy, these applicants are often subject to increased bias and may find it difficult to achieve meaningful employment.

Height and weight requirements

Height and weight requirements disproportionately impact certain groups of people. For instance, a rule that firefighters must be at least six feet tall might seem harmless at first. However, the average adult woman in the U.S. is about five and a half feet tall, which means they’d be excluded from applying, even if they were capable and prepared.

There are now some state and local laws in place that prevent weight discrimination at work. It’s both unfair and illegal to require an employee to meet height or weight specifications that are not explicitly required for job safety. People of all sizes and abilities are capable of succeeding at work and deserve equal opportunities. 

Credit history checks

If performing credit history checks is commonplace at your organization, it’s time to make a change. You might not realize it, but using credit checks to make hiring decisions has a discriminatory impact. BIPOC people are more likely to be victims of predatory lending, which impacts their credit. A third of credit reports are also flawed. Some can afford to remedy these errors, but people from underserved communities are less likely to have the resources needed to fix unfair marks against them. 

Women also suffer when credit checks are a part of the hiring process. Because of the pay gap, women make less money and use a higher percentage of their available credit, which leads to lower credit scores. Sensitive issues like domestic abuse, previous incarcerations, or medical debt can also affect credit. These events don’t affect someone’s ability to do their job well, and shouldn’t be a part of the hiring equation.

Gendered job titles

One disparate impact example that’s easy to avoid? Gendered job titles. While not illegal, and often done without thinking, gender-specific job titles make many candidates feel unwelcome. For instance, job postings for “salesman,” “mailman,” “chairman,” and “handyman” will deter women, whether intentional or not. Instead, stay gender-neutral. Use “salesperson,” “mail carrier,” “chairperson,” and “maintenance worker.” Write gender-neutral job descriptions too. This will ensure your job posts are as inclusive as possible and don’t inadvertently exclude any applicants.

Unstructured interviews

Interviews should be a fair and consistent evaluation of each applicant. When hiring teams ask different questions in every interview, it’s more likely that bias will interfere with hiring decisions. Interviewers are subconsciously drawn to people they like or whom they share experiences with, which has discriminatory effects.

It might not be purposeful, but letting bias play a role in interviewing inadvertently disqualifies applicants who might be a better fit for the job. It’s better to use interview guides, video interviews for accountability, and diverse interview panels.

Arbitrary experience requirements

Experience isn’t everything. It might seem like a safer option to make employment decisions based on years of experience, but it’s not the most accurate or inclusive way to evaluate someone’s ability. You also risk passing over great candidates. Years at a job won’t tell you what kind of a leader someone is, what their problem-solving skills are, or what unique perspectives they bring to the table. 

Minimum years-worked requirements unnecessarily exclude young people, people who have changed careers, and veterans. Setting an upper limit on years of experience is discriminatory against older applicants. It’s more valuable to perform a skills assessment and evaluate adaptability and coachability or evaluate candidate accomplishments.

It’s not enough to know the disparate impact definition—it’s important to familiarize yourself with the many examples of disparate impact in the workplace and how you can avoid them. Continue to learn about disparate impact as you strive towards a more diverse and inclusive workforce.

Importance for companies to be aware of disparate impact 

Hiring teams should be aware of disparate impact so that they can prevent it. Disparate impact in hiring perpetuates harm to underrepresented groups. Not only that, non-inclusive hiring practices mean companies are missing out on talent. 

The 80 percent rule was created to help organizations determine if their practices are unknowingly discriminatory. People from any protected class should be hired at least 80% of the rate at which people from non-protected classes are hired. For example, an employer might hire 60% of their white male applicants, but only 10% of their nonbinary applicants. In this case, the rate of hiring nonbinary applicants is much less than the rate at which white male applicants are hired. These hiring practices are evidence of discriminatory habits, even if the company doesn’t realize it.

Legal consequences for companies with disparate impact in hiring

What’s disparate impact in relation to the law? Companies with discriminatory practices, intentional or not, are susceptible to legal claims. When examined, these companies must be able to prove that imbalanced hiring practices are necessary for safe and efficient business operations. For instance, a strength requirement might be a business necessity for jobs that require lifting. This might disqualify some applicants, but those requirements can’t be changed because of the nature of the work. 

Organizations must ensure that requirements are directly related to job performance. If the requirements are arbitrary, companies can be sued for employment discrimination. Don’t put your organization and job applicants at risk—be careful to avoid disparate impact in any form.

Create a more diverse and inclusive hiring process today! 

Build a welcoming, inclusive hiring practice that avoids all kinds of discrimination. Incorporate a structured interview guide to deliver a consistent hiring experience, identify opportunities for coaching with recorded video interviews, and share better job posts with an inclusion optimizer tool. Clovers is here to help companies, large and small, create more diverse and inclusive workspaces—starting with the hiring process. Reach out to a Clovers team member to start hiring more inclusively today!

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