Adverse Impact: How to Avoid This Type of Claim

Adverse impact (also called disparate impact) occurs when a facially neutral policy inadvertently affects a member of a protected group¹. You, the manager, must understand the implications of this policy and be aware of how to manage your business in such a way as to avoid this type of claim. A few simple tips can be offered to help you avoid an adverse impact claim:

1. Provide an accurate job analysis and job description! It is vital that you provide employees and future employees with an accurate job analysis and job description! The job analysis and job description must be in line with your company's strategies towards goal achievement. When your job document aligns with your company's strategies and goals, you will save yourself so much legal hassle because you have proof you hired based on your existing strategies and goals! Be sure to update your job documents as frequently as you change your strategies and goals so that you can be safe from adverse impact claims.

2. Document, document, document! You must document everything. Documentation is the best way to avoid adverse impact claims. Document everything you do that pertains to hiring, selecting, training and firing employees. This even includes documenting interviews with potential employees that you do not hire! Documentation gives legible proof that all your decisions were job related based on your company's strategies and goals, thus protecting you from the EEOC and adverse impact.

3. Conduct accurate performance appraisals! Performance appraisals are crucial for keeping in line with your company's strategies and goals. When you conduct an accurate performance appraisal, you are evaluating your employees based on job related standards. Thus, when you find that someone is not meeting up to company standards after conducting a performance appraisal, you have grounds to act based on job relatedness and not on personal bias or opinions. Don't take chances with the EEOC - every decision must be job related!

4. Every decision must be job related or out of business necessity! Job relatedness and business necessity are the only two outs for avoiding adverse impact claims. However, you cannot prove job relatedness and business necessity unless you have accomplished my first three points. Once you have secured a solid job analysis/description, have documented all your steps, and have conducted accurate performance appraisals, you can then successfully avoid adverse impact claims based on job relatedness or business necessity. It is here that the EEOC will be successfully deterred, and you will be saved from court trials and negative public relations.

Each and every one of these steps are vitally important to maintain healthy business practices that deter adverse impact claims. Always remember: the more work you put into it now, the more money you will save in the long run.

1. "Adverse Impact Law & Legal Definition." US Legal Definitions