What Is a Disparate Effect?
The term disparate effect refers to an adverse impact on employment caused by an exclusionary or discriminatory employment policy or practice. Employers can face legal repercussions, penalties, and fines if their employment practices are found to be in violation of civil rights. The U.S. Supreme Court’s decision in Griggs v. Duke Power Co. established that if tests used in the hiring process result in disproportionate exclusion, such a practice constitutes a disparate effect. The U.S. Equal Employment Opportunity Commission applies the 4/5ths Rule to determine if a screening leads to a disparate effect, which occurs if the selection rate for any group is less than 80 percent of the highest group. Disparate effects can lower diversity and vibrancy in the workplace, resulting in the exclusion of qualified candidates. Employers should prioritize fair and equitable employment practices to avoid legal and financial consequences.