What is the Difference between Disparate Impact and Disparate Treatment?

Compare disparate impact and disparate treatment, including intent, evidence, EEOC concerns, workplace examples, and hiring compliance risks. Employers can reduce discrimination claims through consistent policies, bias training, regular audits, and proper documentation.

By Douglas Wade, Attorney

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Table of Contents

1. Introduction

2. Disparate Impact

3. Disparate Impact vs Disparate Treatment

4. Disparate Treatment

5. Addressing Workplace Disparate Impact Claims

6. How to Avoid Disparate Impact and Treatment When Hiring

7. Proving Disparate Treatment

Introduction

Discrimination cases submitted to the U.S. Equal Employment Opportunity Commission annually are a huge number. They include both disparate treatment & disparate impact. These problems can arise in all environments. They also happen in places where employers actively strive to prevent bias & discrimination. For instance, utilizing AI in your hiring process may seem like a step that will improve equity. The EEOC claims that these instruments are often prejudiced. The primary cause? The data they use is biased by nature.

The Commission has already taken major action to deal with the potential drawbacks of AI. Their novel Artificial Intelligence & Algorithmic Fairness Initiative seeks to provide guidance to employees, employers, vendors, and job applicants, so that these technologies are used equitably and in accordance with federal equal employment opportunity laws.

Protected traits are frequently used as justifications for discrimination. However, you are only able to record the most clear and explicit categories when a possible discrimination instance is reported using this frame. You don’t receive the subtle insights that might help you comprehend how employment practices that appear to be well-meaning can also be discriminatory.

This guide will examine the two actual forms of discrimination:

Disparate treatment (direct & intentional)
Disparate impact (indirect & unintentional)

Disparate Impact

It is a type of unintentional & indirect discrimination. It occurs when certain promotion, hiring, or employment choices disproportionately harm members of a Title VII protected group. “Adverse impact” is another term for disparate impact.

Disparate Impact in the Real World

Implementing a facially impartial employment practice—one that, while seeming fair and equal on the surface, is actually prejudiced in its implementation or result—often results in disparate impact (the AI systems discussed above, for example). A practice is generating disparate impact if it seems fair yet disproportionately affects some groups of individuals.

Disparate impact could happen throughout the actual employment procedure. Unintentional prejudice can occur when using simple, well-known screening techniques, including credit and background checks, previous employment history, testing, & educational requirements.

Minority applicants may inadvertently be excluded by a standard credit check. Applicants of color may have lower credit ratings than white applicants because systemic racism may render it challenging for minorities to obtain and maintain higher-paying jobs. The primary problem with disparate impact is that numerous organizations think they are treating everyone fairly by enforcing uniform rules. However, certain groups may benefit from these methods while others may suffer. Making your protocols equitable rather than equal is essential.

Attempts to employ a disparate impact evaluation in more contexts and to encourage its adoption have shown mixed outcomes. Changes in the Supreme Court’s composition and the political power dynamics of the federal legal and executive branches have frequently led to changes in the general interpretation and application of anti-discrimination laws, as well as the implementation of disparate impact standards that consider particular legislative outcomes or effects.

The use of disparate impact evaluations to address racial discrimination has been the most contentious subject. Civil rights campaigners and subsequent democratic governments enthusiastically supported legislation with excessive effect requirements.

Those who favored the appointment of conservative judges who would apply the rules narrowly and diminish their effectiveness opposed affirmative action laws and disparate impact restrictions in particular. The concept of disparate impact vs disparate treatment plays a significant role in employment discrimination law.

Conservatives who were concerned about defending people’s rights in a variety of situations, such as those pertaining to pregnancy, disability, or religious freedom, supported disparate impact assessments. To prevent discrimination against pregnant women, people with disabilities, & religious minorities, Congress and courts established regulations for accommodations.

How Serious an Issue Is It?

Companies can no longer continue to overlook this issue. In medicine, even tests as comprehensive and systematic as the GP (general practitioner) clinical examination have negative effects. In fact, research indicates that doctors from ethnic minorities are four times more likely than their counterparts (white) to fail the test. According to one study, the discrepancy starts in medical school, where minority students are vulnerable to racial harassment and discrimination as well as less encouraging social and academic settings.

As a basis of culpability under Title VII, disparate impact is forbidden (with the exception of a few significant circumstances that we discuss in more detail later). For the act to be prohibited, an impacted employee would need to demonstrate that particular groups are disproportionately disadvantaged. Disparate treatment may be considered the other type of discrimination if there is evidence of intent or motive along with disproportionate impact.

Must Read: Employment Litigation: Key Issues in Job Termination, Discrimination, and Harassment Cases

Disparate Impact vs Disparate Treatment

HR professionals ought to distinguish between adverse impact & disparate treatment. The two key concepts have different legal meanings. They are frequently misconstrued. Their understanding is critical in navigating compliance & equitable hiring procedures. An apparently neutral practice/policy may disproportionately impact people who belong to a protected group. It can happen even in the absence of discriminatory intent. This is known as adverse impact (sometimes called disparate impact).

A background check procedure that excludes applicants with specified criminal records may inadvertently exclude a greater proportion of candidates from a particular racial/ethnic group. Even in the absence of discriminatory intent, this kind of impact may subject an entity to responsibility under EEOC (Equal Employment Opportunity Commission) rules. Deliberate discrimination is a component of disparate treatment. A comparison of disparate impact vs disparate treatment helps organizations identify potential legal risks.

This occurs when people are treated differently because of a protected trait. Disparate treatment might occur if two workers with similar criminal records were handled differently throughout a background check. One was fired, and the other was kept. It was due to their gender or color. Although disparate treatment & adverse impact are distinct, both can result in reputation harm and legal repercussions. HR ought to comprehend this distinction while putting background check rules into place and using them.

Differences

Intent: Disparate impact does not include deliberate discrimination. Disparate treatment does.
Focus: Disparate impact evaluates the results of rules or practices. Disparate treatment looks at the employer’s behavior & intentions.
Evidence: Disparate impact depends on statistical evidence. It has to demonstrate disproportionate effects on a protected group. Disparate treatment needs evidence of discriminatory intent.

Disparate Treatment

It is a deliberate kind of discrimination. Workers of a protected class often get intentionally treated differently from other workers in the process of making decisions (i.e., the processes in place for employing, rewarding, or firing employees). One well-known example of unequal treatment is the usage of distinct pay levels for men and women. In contrast to disparate impact, an impacted person must demonstrate that their employer purposefully treated them differently because they belong to a protected group.

Disparate Treatment at Work

A healthcare network was sued by the EEOC in early 2023 for allegedly compensating newly hired male staff more than female employees with more tenure and job experience. Additionally, the company declined to modify the wages of female workers.

Here’s a made-up example: Betty works as a bank teller and is white. A man of African American descent enters the bank and requests that Betty forgive a late charge on his bank card. Betty rejects his insistence. A white man enters later that day. He asks Betty to forego his late fee after describing a similar circumstance. She does this time. It may be considered discriminatory treatment if Betty purposefully treats clients differently because of their race.

Addressing Workplace Disparate Impact Claims

These are the subsequent steps in the procedure if your business is charged with disparate impact:

The impacted employee or employees must demonstrate that a certain practice is negatively affecting a set of protected people.
The employer has to prove that the activity is relevant to the employment or a “business requirement.”
The employee prevails if the employer is unable to defend their actions. The claimant must either find an approach that would have satisfied the business requirement without inflicting as much harm or incur a loss if the employer is successful.

1. Evidence of Adverse Impact

It is more essential to determine the severity of any imbalance because almost any methodology will result in some degree of differential impact. Since there isn’t a single, reliable criterion to satisfy, this can be challenging. Rather, a combination of statistical analysis and anecdotal evidence is used to quantify disparate effects. To ascertain if an employer’s actions negatively affect a minority group, many experts apply the “80 percent rule” (the “Pareto Principle”).

How Can the 80% Rule Be Used?

The rule functions as follows mathematically. Let’s say your company has 100 white applicants. 100 applicants were of color. The hiring rate for white candidates is 90%. 90 of them got hired. However, just 60 minority applicants—or 60% of the total—are hired. Divide the selection rate of the minority group (60%) by that of the non-minority group (90%) to see if there is a discriminatory impact. The selection percentage for applicants from minority groups is roughly 67% of that of white applicants. This is less than the acceptable level of 80%.

Example: Comparison of Selection Rates

A staffing organization settled a lawsuit alleging discriminatory recruitment and placement in 2022 for $550,000.The lawsuit claims that the business either assigned employees to their lowest-paid positions or simply rejected them if they were pregnant, black, over 50, physically incapacitated, or injured. Additionally, they “put personnel in positions according to race and sex” and “complied with customers’ race and sex preferences.” If we were to examine the company’s hiring statistics, the percentage of minority recruits would undoubtedly fall short of or fall short of 80% of non-minority hires.

Other Techniques for Demonstrating Impact

The broad application of the “80% Rule” has drawn criticism from several specialists. The “80% Rule” ignores valid elements that could contribute to discrepancies, such as geography, culture, and necessary qualifications. Professionals now compare a company’s actual rate to what would happen if decisions were made at random. This approach is more effective than the “80 percent Rule” since it recognizes the potential imbalance these elements may create.

2. Employer Rationale Based on Business Requirements

It’s not always necessary to stop an activity that has negative effects. It may be justified under some situations. Legally speaking, the employer has the burden of proof if there is evidence of a discriminatory impact. They must justify their procedure as a “business need” and demonstrate how it is essential for the company’s operations for efficiency or safety-related reasons.

Three Legal Requirements for Business Needs

The Legal Dictionary states that in order for an employer to assert this defense, three requirements must be met. The relevant practice needs to:

Be seemingly impartial
Be administered consistently
Have an uneven effect on a protected class

Cases of Business Requirements

Consider yourself a filmmaker doing screenings for a male part in a future movie. Casting a guy is a business requirement in this case. As a result, it is acceptable to arrange auditions exclusively for male actors. In a similar vein, a firefighter may need to be able to lift at least fifty pounds. This will obviously have a negative effect on a large number of female applicants. However, it is seen as a job-related need due to safety concerns. However, it is unacceptable for a CEO to decline to interview a female for a position only because clients might want a man in that position.

3. Finding Less Discriminatory Substitutes

An employee can find alternative practices that satisfy the same requirement without having as negative an impact if an employer can demonstrate that the discriminatory practice is required due to a legitimate business need. If the worker is successful, the employer will have to stop the discriminatory conduct and may be subject to additional sanctions. Because of this, it’s critical that employers carefully examine every operation prior to deployment (and then on a regular basis thereafter). The best course of action in this situation is to always choose the least harmful practice.

How to Avoid Disparate Impact and Treatment When Hiring

Any hiring procedure has the ability to have negative effects. This is true for both more contemporary techniques like situational analysis and personality tests, as well as more conventional ones like assessment centers and interviews. The debate over disparate impact vs disparate treatment often arises in hiring and promotion decisions. Use the industry best practices.

1. Consistency Throughout the Hiring Process

Make sure your hiring procedure is equitable & uniform for all candidates. Make use of standardized questions. The same idea is applicable for raises and promotions. Ask each person the identical set of scenario questions if you decide to include oral exercises in an interview. The possibility of deliberate discrimination may be decreased by consistency. Remember that consistency might still have unintended negative effects. Make sure your questions are not intrinsically biased by auditing them.

2. Teach Assessors to Steer Clear of Bias

Assessors need to be able to evaluate persons impartially and equitably. They must be able to recognize, concentrate on, & assess the appropriate competencies. The assessor must grade each candidate’s response based on the same standards (such as creativity & logic) if they are posing the identical situational question to each candidate. They should never concentrate on characteristics unrelated to the solution.

3. Regularly Check & Evaluate Your Procedures

Keep an eye on the assessors’ scoring procedure. It is to make sure they haven’t fallen into a trend impacted by unconscious/conscious biases. Every year, review your training procedure multiple times. Additionally, keep a watch on the employment process outcomes for various protected groups to look for discrepancies. Do you consistently ignore women but never men? Does the recruiting manager consistently fail to consider Muslim applicants? When you start looking for patterns on purpose, you could find negative effects.

4. Archive Decisions for Legal Protection

Now you’ve evaluated your procedures. Take it a step further and meticulously record every action you take. Keep records of hiring procedures, job candidates, & rejections to help you guard against unfounded accusations. Record the justifications for wage raises and promotions. Keep official records of any disciplinary measures or terminations.

For instance, it’s vital to document particular instances that show a lack of competence if a worker is fired for subpar work. You should be ready to defend your activities in the event that a victim accuses you of having a discriminatory impact or treatment.

Proving Disparate Treatment

1. Prima Facie

The worker (plaintiff) has to first provide a “prima facie” case—that is, proof of discrimination—in order to establish differential treatment. Both direct and indirect (circumstantial) evidence may be used.

An employer acknowledging that its rules are intended to discriminate against specific protected classes could serve as direct evidence. Unfortunately, direct proof is typically difficult to obtain. The plaintiff must rely on circumstantial evidence to establish their “prima facie” case.

The plaintiff has to establish four fundamental components when utilizing circumstantial evidence:

The plaintiff belongs to a protected class.
The plaintiff qualifies for the disputed employment benefit.
The plaintiff was not given the relevant employment benefit.
The employment benefit was still accessible even if the plaintiff did not receive it or if someone outside the plaintiff’s protected trait received it.

2. The Non-Discriminatory Reason of the Employer

The plaintiff presents his “prima facie” case. The employer has to provide a valid & non-discriminatory explanation. It is not necessary for the employer to prove that it did not discriminate.

The employer can assert that his treatment of the plaintiff was due to the plaintiff’s qualifications. He might claim that the plaintiff lacks the college degree required for a promotion. There could be other explanations as well.

3. Disproving the Employer’s Claimed Justification

The plaintiff must demonstrate that the employer’s justification for its acts is false. They are only a pretext for its true motivation. The employer wanted to act unfairly against members of a protected class. The plaintiff must provide some proof that the employer was really motivated by discrimination, but they do not have to show that the employer had an illegal motive. By doing this, the court is able to determine whether or not there has been disparate treatment.

The plaintiff may try to demonstrate that the employer’s stated justification is a sham in a number of ways, such as:

Employer’s Changing Reasons: For instance, it may be sufficient to demonstrate pretext if the employer informed a worker that she was let go due to subpar work, but subsequently stated in a statement that the reason was corporate downsizing.
Employer Decision Makers’ Remarks: For example, if a manager made racist remarks against African Americans and subsequently fired a significant portion of their workforce, that could be proof of pretext.
Employer’s Unequal Implementation of Rules: An example of pretext would be if an employer told a worker that he was not considered for a promotion because he lacked the necessary qualifications, but then promoted another worker without the same qualifications.

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What is the Difference between Disparate Impact and Disparate Treatment?

Introduction

Disparate Impact

Disparate Impact vs Disparate Treatment

Disparate Treatment

Addressing Workplace Disparate Impact Claims

How to Avoid Disparate Impact and Treatment When Hiring

Proving Disparate Treatment

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