Look Out for “Adverse Impact” and the EEOC
One of the most aggressive Federal Agencies is using a legal precedence to “proactively” go after organizations to discover any type of discrimination taking place in your organization. They are looking for discrimination based upon gender, race, disability or veteran status.
The basis of the Adverse Impact (also known as Disparate Impact) is the “80 percent” rule. This 80 percent rule is applied to any particular employment practice they target to determine if there are unlawful disparate impact in the selection practices.
As an Executive for any large organization, you should place this item on the front burner of things to check out with your human resources group and possibly your legal advisers. Why? Because the fines can be huge depending upon the size of your organization AND there are retroactive over several years.
One company who recently learned their “adverse impact” lesson was 3M receiving a $12 million fine due to the selection process of their Six Sigma process. The EEOC found their selection system discriminated against their older employees.
Several people have asked “how does this 80% rule work?”
Okay, the process works this way, when a company uses a particular employment or employee selection process or procedure then the protected categories (by law) must be within 80 percent of the mean or average used in the process. In other words, there is only a 20% fudge factor allowed. And, you must prove the percentages with valid and timely statistics.
The part about the valid and timely statistics means there are no assumptions or missing pieces to the puzzle or you are subject to lose.
There are a couple of additional factors to think about when looking at this potential costly situation. Seems the Agency has looked into any areas where assessments are used. In can include the hiring and selection processes and they have looked into the areas of training – when assessments are used. Therefore, if your assessment provider cannot provide you with statistical data to verify compliance with the 80% rule – then you are at risk.
One of the major reasons we use our Strategy Business Partner for providing assessments to our clients is in fact due to the continuing research and studies they provide for us – and our clients. Currently, our major assessments are supported by statistically significant data (a legal term for accuracy in our data) which has been provided to clients to offset the audits by the EEOC agency responsible for the Adverse Impact reviews.
Take action today by contacting your assessment providers and ask them if they have a current Adverse Impact Study regarding their assessments and it covers every assessed point of reference. If they cannot or will not provide this documentation, then find an assessment provider who does.
If you need to discuss any of the above points or receive a copy of our Adverse Impact Study by our Strategic Business Partner, please contact us by phone 901-757-4434 or email me at voss “at” inneractiveconsulting dot com. (sorry about the strange way I wrote my email address, however, I hate spam and their robots find real email addresses on the internet and the spam begins.)