Adverse Impact Law & Legal Definition


Adverse impact, in the context of employment, refers to employment practices that appear neutral but have a discriminatory effect on a protected group. It occurs when a decision, practice, or policy has a disproportionately negative effect on a protected group. The adverse impact may be unintentional. Under the Equal Employment Opportunity ommission (EEOC) guidelines, adverse impact is defined as 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. 

The EEOC agencies have adopted a rule of thumb under which they will generally consider a selection rate for any race, sex, or ethnic group which is less than four-fifths (4/5ths) or eighty percent (80%) of the selection rate for the group with the highest selection rate as a substantially different rate of selection. The selection rates for males and females are compared, and the selection rates for the race and ethnic groups are compared with the selection rate of the race or ethnic group with the highest selection rate.