Adverse Impact - Definition & Meaning

Published in Human Resources Terms by MBA Skool Team

What is Adverse Impact?

Adverse Impact refers to the impact on the protected applicants due to the employment practice or policy used by the employer or the organization. In other words, it refers to the total employment process that result in a significantly higher percentage of a protected group in the candidate population being rejected for employment, promotion and placement. It can also be termed as Disparate Treatment.


It is a significant disparity between the proportions of (say) minorities in the labor pool available and the proportion you hire. So, the key here is to show that the employment practice carried out had an adverse impact or not. If it has, then the employer will have to defend himself/herself by arguing that there is a business necessity.


Showing adverse impact therefore plays an important role in discriminatory practice allegations. The employers may not use a certain employment practice that can cause an adverse impact on a particular class of people, unless they can show that the practice is job related.


Example: Griggs v. Duke Power Company


An individual, who believes that the employer’s selection process had an adverse impact on him. He can establish a primia facie case of discrimination.


How to show an adverse impact:

• Disparate Rejection Rates: It can be shown by comparing the rejection rates for a normal group with the minority group.

• Restricted Policy: This approach means showing that the employer’s employment policy unintentionally or unintentionally rejected members of a protected group.

• Population Comparison: It compares the percentage of white workers and minority or protected group in the organization to the percentage of these corresponding groups in the market.

• McDonnell-Doughlas Test: Lawyers in adverse impact cases uses the above 3 to test that the employer’s policies has an adverse impact but he/she uses the McDonnell-Doughlas test for showing intentional disparate treatment.


Hence, this concludes the definition of Adverse Impact along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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