Disparate Impact and How to Avoid It

In Griggs v. Duke Power Co., 401 U.S. 424 (1971) the US Supreme Court dealt with a specific situation when seemingly neutral employment policies led to discrimination in the workplace . The Court ruled that the employer violated the law when the company required that all applicants in order to qualify for a job or transfer should have a high school diploma or to pass a standardized general intelligence test.

As a result of that employment practice, Afro-American candidates were disqualified in much higher numbers than Caucasian candidates, i.e. it had a disparate impact. The problem was that the hiring practice was not “significantly related” to a successful job performance. That’s why it was defined as discriminatory.

After Griggs employers were supposed to take measures in order to avoid a disparate impact during hiring, transferring, or promoting their employees. However, such situations could arise unintentionally due to certain market conditions or specifics of a particular industry. How employers are supposed to deal with the situation? What are the guidelines to avoid an adverse impact?

In 1978 The US Equal Employment Opportunity Commission (EEOC) adopted Uniform Guidelines on Employee Selection Procedures. The Guidelines define and adverse or disparate impact as “substantially different rate of selection in hiring, promotion or other employment decision which works to the disadvantage of members of a race, sex or ethnic group.”

Under the adopted rule of thumb, a selection rate for a protected group based on race, sex or ethnicity would be considered “substantially different,” if it is less than 4/5 or 80% of the selection rate for the group with the highest selection rate.

For instance:

Group Applicants Hired Selection Rate Percent Hired
White 78 21 21/78 27%
Black 32 8 8/32 25%

In the example above, there are 110 applicants: 78 white and 32 black. In the white applicants pool 21 out of 78 applicants were hired, which is 27% hire rate. In the black applicants pool 8 out of 32 applicants were hired, which is 25%. Under the rule, the selection rate should be at least 80%. In our example it is 93% (25:27X100%). So there is no discrimination there.

Note that the example above illustrates a rule of thumb only. It is not sufficient to determine whether there is discrimination in your case. In order to do that you should contact your employment lawyer.