Adverse Impact

Adverse impact is a legal term that refers to the potential for discrimination in an organization's hiring and promotion practices. There are two types of Adverse Impact: disparate treatment and disparate impact. Disparate treatment refers to intentional discrimination based on race, religion, age or disability. Disparate impact refers to policies or procedures that unintentionally have a negative effect on one group but not another (for example, requiring job applicants to be bilingual).

Because adverse impact can be subtle, employers must make sure they carefully conduct an analysis of their policies and practices to ensure they don't negatively affect certain groups more than others.

A policy or practice that has an adverse impact on one or more protected groups is illegal under the ADEA. Because adverse impact can be subtle, employers must make sure they carefully examine their policies and practices to ensure they don't negatively affect certain groups more than others.

Adverse impact is not always easy to identify. An employer may believe that its policy of asking for two years of experience for a particular job is fair because it does not have a disparate impact on any particular race or gender group, but in reality this policy could have a disproportionate effect on other group of people.

Here are some examples of adverse impact:

• Women are 2x more likely than men to be paid less than their male counterparts.
• In some states, it is legal for employers to ask women if they've ever been pregnant before making hiring decisions.
• Using a criminal record in a hiring decision.
• Using a credit check in a hiring decision
• Using a drug test in a hiring decision
• Using an employment test in a hiring decision (e.g., an IQ test) or interview question (e.g., “What is your favorite color?”).