Colleges and universities strive to achieve balanced hiring practices, but from a legal standpoint, many fall short without realizing it. To help institutions recognize and overcome this challenge, the PeopleAdmin research team studied the laws surrounding this complex issue and worked with developers to help you solve it.
“From an equal employment opportunity standpoint, the terminology you will generally hear is ‘adverse impact’ or ‘disparate impact.’ They mean the same thing,” explained PeopleAdmin Chief Research Officer Nick Montgomery. “It essentially means you’re not hiring legally protected groups at the rate which your applicant pool would suggest you should be.”
Determining whether your institution’s hiring practices display adverse impact comes down to a simple mathematical formula known as the four-fifths rule or the 80/20 rule.
The Uniform Guidelines on Employee Selection Procedures breaks the formula down to four steps:
- “Calculate the rate of selection for each group (divide the number of persons selected from a group by the number of applicants from that group).”
- “Observe which group has the highest selection rate.”
- “Calculate the impact ratios, by comparing the selection rate for each group with that of the highest group (divide the selection rate for a group by the selection rate for the highest group).”
- “Observe whether the selection rate for a group is substantially less (i.e., usually less than 4/5ths or 80%) than the selection rate for the highest group. If it is, adverse impact is indicated in most circumstances.”
“Let’s say you had 80 applicants who were White and 40 applicants who were Black or African-American, and you hired 48 from the White group and 12 from the Black group. That means you had a 60 percent selection rate among the White group and a 30 percent selection rate among the Black group,” Nick said. “To see whether this displays adverse impact, we simply take the 30 percent, divide it by the 60 percent, and we find that there is a 50 percent difference between those two numbers. Since that is less than federal guideline of 80 percent there is a potential for adverse impact.”
While a ratio less than 80 does indicate a meaningful difference, having a lower ratio doesn’t automatically mean an institution is in violation of the law.
“The guidelines, the legal literature, all these things say you can’t rely 100 percent on the number,” Nick said. “You must have a selection component that is related to job requirements. As long as you can prove that your hiring practices are based on candidates’ proven abilities to perform a job — and not based on their protected status(es) — that’s okay.”
Nick went on to explain that even if a large portion of your applicant pool chooses not to disclose demographic data, you should still check for adverse impact.
“You would still work with the group that has disclosed. You can get a lot of insight from that group,” Nick said. “If you know the makeup of your disclosed population, the statistical assumption would be that your undisclosed population is similar. That’s the way surveying a sample generally works.”
By properly understanding and searching for adverse impact, colleges and universities can develop more balanced hiring practices that benefit everyone.
“This is an important topic when we think about not only the legal compliance and risk avoidance, but also our society in general,” Nick said.
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