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What is Adverse Impact in Hiring and What You Must Know About It

Published: March 09, 2023 In: Hiring Bias

The hiring process is a critical step for any organization. It is a process that requires careful consideration to ensure that the best candidates are selected for the job. One factor that employers must be mindful of during the hiring process is adverse impact. Adverse impact in hiring can have serious legal and ethical implications, making it essential for employers to understand the concept and the best practices for avoiding it.

What is Adverse Impact?

Adverse impact refers to the potential discrimination against a particular group of candidates in the hiring process, which can be due to various factors such as race, gender, age, or disability.

Adverse impact occurs when an employer's hiring practices unintentionally discriminate against a protected group. This can happen even when the employer doesn't intend to discriminate.

Disparate impact and disparate treatment are two primary forms of adverse impact. Disparate impact is a type of unintentional discrimination that occurs when a hiring practice appears neutral but disproportionately affects a particular group. Disparate treatment is intentional discrimination based on characteristics such as race, gender, or age.

How Does Adverse Impact Occur?

Several factors can contribute to adverse impact in the hiring process. For example, a job posting that uses gendered language or criteria that is not essential to the job can disproportionately deter applicants from protected groups.

Biases can also play a role in adverse impact by influencing hiring decisions, such as favouring a particular candidate based on personal relationships or preconceived notions.

Legal Considerations

Federal and state laws prohibit employment discrimination based on certain protected characteristics. The Equal Employment Opportunity Commission (EEOC) guidelines provide employers with best practices to ensure compliance with these laws. Failure to comply with these regulations can lead to legal action and penalties.

Mitigating Adverse Impact

Employers can take several steps to mitigate adverse impact in the hiring process. One such step is to use objective and job-related criteria for evaluating candidates. Employers can also use blind resume reviews, remove names and demographic information to eliminate biases.

It is essential to create a diverse and inclusive hiring process to avoid unintended biases in the selection process.

Technology can also help reduce adverse impact. For example, companies like Talview offer interview intelligence technology that uses artificial intelligence (AI) and machine learning to monitor and provide feedback on any unconscious bias by interviewers during the interview process. It does this by monitoring the topics being covered, the type of questions being asked and focused on, amongst various other factors. This reduces the potential for human biases in hiring.

Importance of Measuring Adverse Impact

One of the reasons for measuring adverse impact is that it allows employers to identify potential areas of discrimination and make necessary changes to the hiring process to reduce it.

By doing so, the organization can create a more inclusive and diverse workforce, which can bring several benefits such as increased innovation, creativity, and productivity. Furthermore, it can also improve employee morale and engagement, leading to higher retention rates and a positive employer brand.

Moreover, measuring adverse impact can also help organizations comply with legal and regulatory requirements. In the United States, for instance, the Equal Employment Opportunity Commission (EEOC) mandates that employers must demonstrate that their hiring practices do not result in discrimination against any protected group.

Measuring adverse impact and taking necessary steps to reduce it can help organizations meet this requirement and avoid potential legal and financial consequences.

Hiring trends

How to Measure Adverse Impact?

The four-fifths rule, also known as the 80% rule, is a statistical guideline used to compare the selection rates of different groups of candidates. The rule states that if the selection rate for one group is less than 80% of the selection rate for another group, then adverse impact may exist. In other words, if the selection rate for a protected group is significantly lower than that of the non-protected group, there may be discrimination in the hiring process.

For example, let's say a company has two groups of candidates: Group A consists of men, and Group B consists of women. If the selection rate for Group A is 40%, and the selection rate for Group B is 30%, then the company must examine the hiring process for potential adverse impact.

It is important to note that the four-fifths rule is not a legal standard but rather a guideline used to assess potential discrimination. Employers should use this rule as a tool to analyze hiring data and identify potential areas of adverse impact.

If adverse impact is identified, employers should take necessary steps to reduce it and create a more equitable hiring process.

Measuring adverse impact is an essential step in ensuring a fair and inclusive hiring process. The four-fifths rule is a widely recognized guideline to help employers assess potential discrimination in their hiring practices. Employers should use this rule as a tool to identify potential areas of adverse impact and take necessary steps to reduce it. By creating a diverse and inclusive workforce, organizations can attract top talent and promote a culture of fairness and equality.


Adverse impact in hiring can have serious legal and ethical implications for organizations. By understanding adverse impact, employers can take the necessary steps to mitigate its occurrence in the hiring process. The use of objective criteria, diversity and inclusion, and technology can help employers ensure that their hiring processes are fair and free from discrimination. It is the responsibility of every employer to create a fair and unbiased hiring process to ensure that they can attract the best talent and create a diverse workforce.

Tags: Hiring Bias, future hiring trends, Current Hiring Trends

Written by: Team Talview

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