Adverse Impact

What is Adverse Impact?

Adverse impact occurs when a seemingly neutral employment policy or practice results in a disproportionately negative effect on members of a protected group, even when there is no intent to discriminate. It is one of the most important legal concepts in HR because it can expose organizations to liability under anti-discrimination laws.

Why Adverse Impact Matters

Most often, adverse impact is discovered in procedures and standards that guide hiring or performance decisions, such as qualification requirements listed in job descriptions, questions asked during job interviews, and criteria used in performance evaluations for promotion or termination. Employers typically use statistical analysis, such as the four-fifths rule, to identify whether their selection processes produce adverse impact.