The Disparate Impact Calculator is a tool used in human resources, compliance, and legal audits to evaluate whether a selection process—such as hiring, promotions, or terminations—unintentionally discriminates against a protected group. This analysis is crucial in employment law and equal opportunity practices to identify any disproportionate effects on race, gender, age, disability status, or other legally protected characteristics.
The calculator compares the selection rate of a protected group to that of a non-protected (reference) group using the Adverse Impact Ratio (AIR). If the ratio falls below a certain threshold, it may signal that the process has a disparate impact, even if discrimination was not intentional. The most commonly used guideline is the “80% Rule”, which states that if the selection rate for a protected group is less than 80% of that of the non-protected group, further investigation is recommended.
Formula of Disparate Impact Calculator
Adverse Impact Ratio (AIR)
AIR = (Selection Rate of Protected Group) / (Selection Rate of Non-Protected Group)
Where:
- Selection Rate of Protected Group = (Number of individuals selected from the protected group) ÷ (Total number of applicants from the protected group)
- Selection Rate of Non-Protected Group = (Number of individuals selected from the non-protected group) ÷ (Total number of applicants from the non-protected group)
Interpreting the AIR:
- If AIR ≥ 0.80 → No disparate impact is indicated.
- If AIR < 0.80 → Potential disparate impact is indicated under the 4/5ths Rule or 80% Rule.
This calculation helps organizations maintain compliance with equal employment opportunity (EEO) standards and avoid legal exposure due to discriminatory practices.
General Terms for Disparate Impact Calculation
Here is a table of key terms often associated with the Disparate Impact Calculator:
| Term | Description |
|---|---|
| Disparate Impact | Unintentional discrimination resulting from a neutral practice or policy. |
| Protected Group | A group of individuals legally protected under anti-discrimination laws (e.g., race, gender). |
| Non-Protected Group | A group not specifically protected or used as a reference group in analysis. |
| Selection Rate | The proportion of individuals from a group who are selected (e.g., hired). |
| Adverse Impact Ratio (AIR) | The ratio of selection rates between protected and non-protected groups. |
| 80% Rule / 4/5ths Rule | A guideline suggesting adverse impact may exist if AIR is less than 0.80. |
| Equal Employment Opportunity (EEO) | Employment practices that are fair and not discriminatory. |
| HR Compliance | Adherence to legal and regulatory requirements in human resource practices. |
| Audit | A formal review of employment practices to ensure fairness and legality. |
This reference table helps users understand the context and relevance of each component in the calculator and its implications in real-world decision-making.
Example of Disparate Impact Calculator
Let’s walk through a sample calculation using the Disparate Impact Calculator.
Example Scenario
An organization is reviewing its hiring practices. The data shows:
- Protected Group (e.g., women):
- Applicants: 100
- Selected: 30
- Non-Protected Group (e.g., men):
- Applicants: 100
- Selected: 50
Step 1: Calculate Selection Rates
- Protected Group Selection Rate = 30 / 100 = 0.30 (30%)
- Non-Protected Group Selection Rate = 50 / 100 = 0.50 (50%)
Step 2: Apply the AIR formula
AIR = 0.30 / 0.50 = 0.60
Since 0.60 < 0.80, this result may indicate disparate impact. It suggests that women are selected at only 60% the rate of men, which fails the 80% Rule and should prompt further analysis or review of the selection criteria.
Most Common FAQs
It helps identify whether a selection process unintentionally favors one group over another based on protected characteristics. A result below the 80% threshold may indicate potential legal or ethical concerns regarding fairness in hiring or promotion.
Not necessarily. A low AIR signals that further investigation is needed. If the employer can demonstrate that the selection method is job-related and consistent with business necessity, it may still comply with the law, even if a disparate impact is present.