Adverse Impact vs Disparate Treatment
What's the difference between adverse impact and disparate treatment?
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Recruiters everywhere work daily to mitigate bias as much as possible in their hiring process. This is in part adhering to our common moral obligation to create an equitable society. And recruiters play a crucial role in this effort. However, it’s also simply good business. The McKinsey 2020 report “Diversity Wins: How Inclusion Matters” cites data that found that the most diverse companies consistently outperform their less diverse peers in profitability.
As such, it’s clear that companies who genuinely want to remain competitive in the modern business landscape must work to root out unfair hiring practices, whether deliberate or unintentional.
To this end, we have to consider the distinction between adverse impact vs disparate treatment. These concepts are often confused. Both refer to discriminatory practices against protected groups.
However, their key difference lies in one thing – intent. Adverse impact is the result of unintentional discriminatory practices whereas disparate impact discrimination is very much intended.
Additionally, disparate treatment specifically refers to the legal concept regarding outright discriminatory practices. Adverse impact on the other hand is the result of unintended consequences from the hiring process’s design. Either way, despite the law strictly prohibiting discrimination, it remains in practice all the same.
So, how do we solve the problems of both adverse impact and disparate treatment? The first step is awareness. You need to understand the exact nature of these practices and what you can do as recruiters to eliminate it at every stage of the hiring process.
That’s why today we’re taking a deeper look at these concepts, what causes them, and what you can do about it.
The U.S. Equal Employment Opportunity Commission's adverse impact definition says that adverse impact is the substantially different rate of selection in hiring that disadvantages the members of a given race, sex, or ethnic group. In more simple terms, the answer to “what is adverse impact” is hiring practices that favor one group over another protected group.
As an example of adverse impact, imagine a hiring process that requires background checks for its candidates. However, these background checks are not run on every candidate. Rather, more background checks are run on members of a certain group. As a result, the members of this group have a lower selection rate. This is adverse impact. As recruiters, it’s important to recognize this reality and take active steps to create a more equitable and inclusive hiring process.
To this end, seek out tools and strategies that minimize the potential for unconscious bias to affect recruiter judgment. Consider standardizing your hiring process at every stage, especially those that involve direct interaction between the recruiter and the candidate. For example, creating a consistent interview process with standardized questions gives every candidate an equal opportunity to show why they’re the applicant for the role.
On-demand phone interviews are perfect for this. This asynchronous process minimizes the chance for recruiters’ unconscious bias to affect their decision or change the interview format based on circumstance. Rather, they record a single interview that is delivered to all candidates. Ultimately, this means that every candidate receives the same interview experience.
Disparate treatment is defined in hiring as the conscious and deliberate discrimination against a given group based on protected characteristics such as gender, race, or religion. This often occurs when an employer treats a specific group differently through policies, practices, or other systems.
For example, if a recruiter rejects a qualified candidate based on their race or age, that would be considered disparate treatment. Unfortunately, this is not so easy to recognize as intentional bias is often hidden behind alternate reasoning. Rather, recruiters or employers in these circumstances provide tests or assessments of particular skills to only certain applicants of a given group. This ultimately results in a lower selection rate than the majority group.
It’s important to note here that disparate treatment is not the same as disparate impact. In terms of disparate treatment vs disparate impact, the impact is a result of neutral hiring practices that disparages a given protected group where treatment signifies intentional descrimination.
A more specific example of disparate impact would be rejecting a candidate for refusing to change aspects about themselves such as dress or facial hair important to their religion. This often takes form in job postings that require candidates to be “clean-shaven.” That would also be considered the disparate impact.
Both disparate treatment and impact refer to discriminatory practices. Disparate treatment is deliberate. Disparate impact is unintentional. Nonetheless, both harm people and prevent a healthy workplace.
Here we see another opportunity to utilize asynchronous, audio-based screening interviews to improve workplace diversity. This format mitigates the opportunity for recruiter visual bias from affecting important hiring decisions.
As this point, you’ll no doubt wonder how to calculate adverse impact as to recognize it and take the steps necessary to cut it from your hiring practices. The most straightforward method is used by federal contractors to evaluate their selection process via the 4/5th rule. This rule explains that a selection rate for any protected minority that falls below 80% is evidence of adverse impact.
Calculating for adverse impact is highly recommended rather than relying on intuition. As such, consider utilizing an adverse impact calculator. These tools are widely available and easy to use.
Use this adverse impact calculator!
However, if you’re old school and would like to perform the calculations yourself, the adverse impact formula itself is easy to use.
Simply divide the number of hires of a given group by the number of candidates. Do this for both the majority group in your workforce and a protected minority you would like to assess for adverse impact. You will then divide the quotient of the minority group by that of the majority. Should the resulting number be less than 80%, an adverse impact is present.
Here’s what the formula would look like written out:
(Protected Group Hires / Protected Group candidates ) / (Majority Group Hires / Majority Group Candidates)
Let’s look at an example.
Imagine a company that suspects unfair hiring practices are affecting its workplace. They’ll start by identifying the protected group in question, whether this be based on religion, race, or sex.
For the sake of this example, this group has a selection rate of 5 hires out of 30 candidates. That’s a selection rate of 16.6%.
Their majority group on the other hand has a selection rate of 20 hires out of 50 candidates. So, a selection rate of 40%.
The organization would then divide 16.6% / 40%. Which would result in 41.5%. Here we see a clear indication of adverse impact.
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