What is adverse impact?

In the US, the EEOC (Equal Employment Opportunity Commission) defines adverse impact as follows: “a substantially different rate of selection in hiring, promotion or other employment decision which works to the disadvantage of members of a race, sex, or ethnic group.”

Adverse impact can occur in various employment practices including hiring, learning and development, promotion, transfer, and performance appraisals. It can happen in one specific part of, for instance, the selection process, or during the entire practice. 

Most of the time, adverse impact is an unwanted or unanticipated consequence of an employment practice. An often-named example is that of a company conducting background checks for one group of candidates (A) but not for another (B). 

While they may honestly believe that there is a logical reason for this practice, it can result in adverse impact if it turns out that more qualified candidates from group A are eliminated following this background check and that more candidates from group B are hired.