Adverse Impact Analysis (Overview)


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"Not long after the passage of the 1964 U.S. Civil Rights Act (now commonly known as Title VII), the legislative and judicial fields began hammering out the concept of adverse impact. Nearly 50 years later, after thousands of cases and arbitrations and well over one billion dollars spent by employers, government enforcement agencies, special interest plaintiff groups, and law firms, the concept has been highly refined. It has also expanded to apply to settings other than that for which it was first designed (e.g., some U.S. circuit courts have recently approved of using adverse impact calculations for age discrimination cases).

While the courts still struggle for a definitive explanation of what constitutes a "finding of adverse impact,” the term as used today essentially means the same as when it was first written: a 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 (Uniform Guidelines Questions & Answers Supplement #10). The three most common methods for determining adverse impact are the 80% Rule, statistical significance tests, and practical significance tests." (excerpt from Adverse Impact and Test Validation: A Practitioner's Handbook by Dr. Daniel A. Biddle.)

Learn more about the BCG Institute for Workforce Development by going to www.

Visit to learn about the Adverse Impact and Test Validation webinar series based on Dr. Biddle's book.

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Adverse Impact Analysis (Overview)

  1. 1. Adverse ImpactAnalysisBCGi: Adverse Impact & TestValidation Book Series
  2. 2. What is Adverse Impact? • Adverse Impact occurs when a practice, procedure, or test has a substantially different passing (or success) rate between the competing groups • It can also occur whenever a group’s representation in a workforce is substantially lower than their availability • Adverse Impact can be analyzed for a single event, such as a test, or multiple events/years combined • Adverse Impact is integrally tied into Civil Rights and EEO laws and regulations
  3. 3. Why is this Topic Important to HR/EEO Professionals?• Why do I need to know about this topic? – Adverse Impact that is not justified by validity evidence is against federal law… “disparate impact discrimination” – Historically 90%+ of OFCCP settlements are related to AI – Other regulatory agencies (e.g., the EEOC) have also been highly focused on “systemic” investigations• What are the key essentials I need to know about this topic? – Adverse Impact needs to be computed correctly – Analyses need to reflect reality, not just “push button” data – Analyses should be conducted annually – Adverse Impact comes in several different forms• What are the consequences surrounding these issues? – Flagpole cases & negative press – Audit triggers – $80k to $250k is the typical “start up” cost for an AI case
  4. 4. Presentation Overview• Adverse Impact Overview & Background• The Concept of Adverse Impact & Statistical Significance• AI for Hires, Promotions, Terminations: Selection Rate Comparisons for Single Events• AI for Hires, Promotions, Terminations: Selection Rate Comparisons for Multiple Events• Availability Comparisons for a Single Event• Availability Comparisons for Multiple Event
  5. 5. Resources• Adverse Impact and Test Validation: A Practitioners Handbook by Daniel A. Biddle, Ph.D. – Purchase online at• Adverse Impact and Test Validation Book Series Webinars – Recordings available online for all BCGi Platinum Members – Webinar slides available online to all BCGi Standard & Platinum Members• BCGi Membership – Free Standard Membership – Premium Platinum Membership
  6. 6. About Our Sponsor: Biddle Consulting Group (BCG) BCG is an HR firm dedicated to providing the highest products and services related to Equal Employment Opportunity (EEO), Affirmative Action and Employee Selection. • BCG’s Consulting Services ― Affirmative Action Plan Outsourcing ― Compensation Analysis ― EEO/AA Litigation Support (Plaintiff and Defendant) ― Job Analysis ― Test Development and Test Validation • BCG’s Software Products ― Adverse Impact Toolkit™ ― AutoAAP® affirmative action plan development software ― AutoGOJA® job analysis software ― C4 call center testing software ― COMPARE™ compensation analysis software ― CritiCall® dispatcher/call-taker personnel selection software ― ENCOUNTER soft skills video situational judgment testing software ― OPAC® office skills testing software ― TVAP™ Test Validation & Analysis Program software