Definition
Adverse impact is when a hiring, promotion or other employment step selects people of one race, sex or ethnic group at a substantially lower rate than others, to their disadvantage. A practice that looks neutral can still cause it, so employers check by comparing selection rates group by group.
Also known as: disparate impact, adverse impact analysis
Key figures
United States (federal)As of Oct 13, 2026
- Legal definition
- A substantially different selection rate29 CFR 1607.16(B)
- Adverse-impact threshold
- Below 80% of the highest group’s rate29 CFR 1607.4(D)
- How often to check selection rates
- At least once a year29 CFR 1607.15(A)(2)(a)
- Groups to analyze
- 2% or more of the labor area or workforce29 CFR 1607.15(A)(2)(a)
- Employers covered by Title VII
- 15 or more employees42 U.S.C. 2000e(b)
How it works
Adverse impact is about outcomes, not intent. A test, an interview score or a screening rule can apply to everyone in the same way and still select one group far less often. Federal rules on employee selection, the Uniform Guidelines, cover employers subject to Title VII, which defines an employer as one with 15 or more employees.
To check, calculate each group's selection rate at each step, then compare every rate with the highest one. Federal agencies generally treat a rate below 80 percent of the highest as evidence of adverse impact: the four-fifths rule. Smaller gaps can still count when they are significant in statistical and practical terms, so the ratio is usually paired with a significance test.
The Guidelines expect this review at least once a year for each group making up 2 percent or more of the labor area or workforce. When a step shows adverse impact, the employer needs evidence that it is job related, and should consider alternatives that select as well with less impact.
Example
A retailer adds an online assessment to its cashier hiring. After six months, HR finds that one group passes at a much lower rate than the group passing most often, below the four-fifths line. HR asks the vendor for its validation study, compares the assessment with a structured interview, and keeps the method that predicts job performance with the smaller gap.
How it differs from similar terms
Adverse Impact vs Four-Fifths Rule. Adverse impact is the outcome being tested for. The four-fifths rule is one quick calculation used to flag it: a selection rate below 80 percent of the highest group's rate.
Frequently asked questions
What does adverse impact mean in hiring?
It means a hiring or promotion step selects members of a race, sex or ethnic group at a substantially lower rate than others. Intent does not matter: a neutral-looking test or requirement can still have adverse impact. The employer then has to show the step is job related.
How do you calculate adverse impact?
Work out each group's selection rate at one step: those selected divided by those who applied. Divide each rate by the highest group's rate. A ratio under 0.80 is generally treated as evidence of adverse impact. Add a statistical significance test, especially when the numbers are small.
What is an adverse impact analysis?
It is the routine review of selection rates by group, step by step, for hiring, promotion and other decisions. The Uniform Guidelines expect it at least once a year. A good analysis also records which step caused any gap and what the employer did about it.
Is adverse impact the same as disparate impact?
They describe the same idea from two angles. Adverse impact is the term the Uniform Guidelines use for the statistical outcome. Disparate impact is the legal theory under Title VII, where a practice with that effect is unlawful unless the employer shows it is job related and consistent with business necessity.
Which employers need to check for adverse impact?
Employers covered by Title VII, which means 15 or more employees for 20 or more weeks of the year, fall under the Uniform Guidelines. The yearly check covers each group of at least 2 percent of the labor area or workforce.
What should an employer do after finding adverse impact?
Review the step that caused it. Gather evidence that the test or criterion predicts job performance, and look for an alternative that serves the same purpose with less impact. Document the review, because the Uniform Guidelines expect the records to show both the impact and the validity evidence.
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