Disparate Impact and Disparate Treatment

Disparate Impact and Disparate Treatment: A Comprehensive Guide

Understanding Disparate Impact and Disparate Treatment

In the context of workforce planning and talent acquisition, two critical legal concepts protect employees from discrimination: disparate impact and disparate treatment. These concepts form the foundation of employment law and are essential for HR professionals to understand and apply in their organizations.

Why This Matters

Understanding the difference between disparate impact and disparate treatment is crucial because:

• Legal Compliance: Organizations must comply with Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), and other employment laws that prohibit discrimination.
• Risk Management: Failure to understand these concepts can expose your organization to costly litigation, settlements, and regulatory penalties.
• Ethical Responsibility: Fair hiring practices ensure equal opportunities for all candidates regardless of protected characteristics such as race, color, religion, sex, or national origin.
• Organizational Success: Non-discriminatory practices expand the talent pool and help organizations recruit the best candidates.
• Professional Credibility: HR professionals must demonstrate knowledge of these concepts in exams and certifications like the SHRM-CP and PHR.

What Is Disparate Treatment?

Disparate treatment occurs when an employer intentionally treats employees or job applicants differently based on a protected characteristic. This is intentional discrimination.

Key Characteristics of Disparate Treatment:

• Intent Required: The employer must have deliberately discriminated against the individual or group.
• Protected Characteristics: The discrimination is based on race, color, religion, sex, national origin, age (over 40), disability, genetic information, or other protected statuses.
• Direct Evidence: Cases often involve direct evidence such as comments made by hiring managers, documented policies that explicitly favor one group over another, or documented decisions that differ based on protected characteristics.
• Individual Focus: Disparate treatment typically involves treating a specific individual or small group differently from similarly situated employees.
• Examples Include:
  • Refusing to hire qualified candidates because of their race
  • Paying two employees different salaries for the same work based on gender
  • Promoting individuals with fewer qualifications based on favoritism or protected characteristics
  • Providing different job opportunities to employees based on disability status
  • Using code words or proxies for protected characteristics in hiring decisions

Legal Framework for Disparate Treatment:

Under McDonnell Douglas Corp. v. Green, the legal burden of proof follows this framework:

1. Plaintiff's Burden: The employee must establish a prima facie case by showing:
   • Membership in a protected class
   • Meeting the legitimate job qualifications
   • Receiving an adverse employment action
   • Similarly situated employees outside the protected class were treated differently
2. Employer's Response: The employer must articulate a legitimate, non-discriminatory reason for the employment decision.
3. Plaintiff's Rebuttal: The employee must prove the employer's stated reason is pretextual (a false cover for discrimination).

What Is Disparate Impact?

Disparate impact occurs when a facially neutral employment practice—one that doesn't explicitly discriminate—has an unintentional discriminatory effect on a protected group. This is unintentional discrimination.

Key Characteristics of Disparate Impact:

• No Intent Required: The employer does not need to have intentionally discriminated; the practice's effect is what matters.
• Neutral on Its Face: The policy or practice appears neutral and doesn't explicitly mention protected characteristics.
• Statistical Evidence: Disparate impact is typically proven using statistical analysis showing that a protected group is selected at a significantly lower rate than other groups (usually the "80% rule" is applied: if the selection rate of a protected group is less than 80% of the highest selection rate, disparate impact may exist).
• Group Focus: Disparate impact affects groups or classes of individuals rather than single employees.
• Examples Include:
  • Requiring a high school diploma for all positions, which may disproportionately exclude certain racial or ethnic groups with less access to education
  • Using height or weight requirements that disproportionately exclude women or certain ethnic groups
  • Requiring specific certifications or licenses that are less accessible to certain protected groups
  • Using cognitive ability tests that correlate with protected characteristics and aren't job-related
  • Structured interviews that systematically advantage certain demographic groups
  • Requiring extensive years of experience that exclude younger workers

The Four-Fifths (80%) Rule:

The EEOC uses the four-fifths rule as a practical means of identifying disparate impact. If the selection rate for a protected group is less than 80% of the selection rate for the group with the highest selection rate, it suggests potential disparate impact:

Formula: Selection Rate of Protected Group ÷ Selection Rate of Comparison Group = Ratio (if less than 0.80 or 80%, potential disparate impact exists)

Example: If 50% of male applicants are hired but only 30% of female applicants are hired:
30% ÷ 50% = 0.60 (60%), which is less than 80%, indicating potential disparate impact.

How Disparate Impact Works: The Legal Process

Step 1: Plaintiff Establishes Disparate Impact

The employee or EEOC must demonstrate:

• A specific employment practice (hiring standard, test requirement, selection criterion)
• Statistical evidence showing the practice disproportionately affects a protected group
• The disparate impact is the cause of the disparity

Step 2: Employer's Defense

Once disparate impact is established, the employer may defend the practice by proving:

• Job Relatedness: The practice is directly related to job performance or essential job functions.
• Business Necessity: The practice is necessary for safe or efficient business operations.
• Validity: The practice is validated through proper industrial-organizational psychology methods to measure what it claims to measure.

Example: A requirement for a Commercial Driver's License (CDL) for truck drivers has clear business necessity and job relatedness, even if it disproportionately affects certain groups.

Step 3: Alternative Practices

If the employer successfully defends the practice, the employee may still prevail by showing that the employer rejected an alternative practice that would:

• Have less disparate impact
• Still serve the employer's legitimate interests

Key Differences: Disparate Treatment vs. Disparate Impact

How to Answer Exam Questions on Disparate Impact and Disparate Treatment

Strategy 1: Identify the Discrimination Type First

Read the scenario carefully and determine:

• Is there evidence of intentional discrimination? If yes, you're likely dealing with disparate treatment.
• Does the policy appear neutral but have discriminatory effects? If yes, you're likely dealing with disparate impact.
• Are numbers/statistics mentioned? This often signals disparate impact.
• Are discriminatory comments or explicit policies mentioned? This often signals disparate treatment.

Strategy 2: Look for Key Language

Disparate Treatment Red Flags:

• \"Hired fewer women\"
• \"Manager said...\" (discriminatory comment)
• \"Explicitly require\" (protecting characteristic)
• \"Treated differently\"
• \"Intentionally excluded\"
• \"Favoritism based on\" (protected characteristic)
• \"Only hired men/women for this role\"

Disparate Impact Red Flags:

• \"50% of men selected, 30% of women selected\"
• \"Disproportionately affects\"
• \"80% rule\"
• \"Neutral policy but...\"
• \"Test not validated\"
• \"Less accessible to\" (certain group)
• \"Unintentional but...\"

Strategy 3: Apply the Four-Fifths Rule

When you see numbers in a disparate impact question:

1. Identify the selection rates for each group
2. Divide the lower rate by the higher rate
3. If the result is less than 0.80 (80%), disparate impact likely exists
4. Check if the employer can prove job-relatedness and business necessity

Strategy 4: Know the Burden of Proof

For Disparate Treatment:

Employee must prove: Intent OR that the employer's stated reason is a pretext
Employer must show: Legitimate, non-discriminatory reason

For Disparate Impact:

Employee must prove: Statistical disparity and causation
Employer must show: Job-relatedness AND business necessity

Strategy 5: Recognize Defenses and Their Adequacy

• \"It's a business necessity\" is stronger for disparate impact than just \"we had a reason.\"
• Direct evidence of intent is stronger for disparate treatment than circumstantial evidence.
• Validation studies support disparate impact defenses; comments or patterns support disparate treatment claims.

Exam Tips: Answering Questions on Disparate Impact and Disparate Treatment

Tip 1: Create a Quick Decision Tree

Use this mental framework for every question:

1. Is intentional discrimination mentioned or implied? → Disparate Treatment
2. Are statistics or selection rates mentioned? → Likely Disparate Impact
3. Is the policy neutral on its face? → Likely Disparate Impact
4. Does the answer involve proving job-relatedness/business necessity? → Disparate Impact
5. Does the answer involve proving intent or pretext? → Disparate Treatment

Tip 2: Master the Four-Fifths Rule Calculation

Practice this calculation until it's automatic:

Example Question: \"An employer hired 40% of male applicants and 25% of female applicants. What does this suggest?\"

Solution: 25% ÷ 40% = 0.625 (62.5%), which is less than 80%. This suggests disparate impact based on sex.

Tip: Always divide the smaller percentage by the larger percentage. If the result is less than 0.80, disparate impact is suggested.

Tip 3: Understand What \"Facial Neutrality\" Means

A policy can be:

• Facially Neutral: Doesn't mention protected characteristics on the surface (e.g., \"All employees must be 6 feet tall\") but has disparate impact.
• Facially Discriminatory: Explicitly mentions protected characteristics (e.g., \"We prefer male applicants\"), leading to disparate treatment claims.

Exam questions with facially neutral policies that have adverse effects almost always involve disparate impact.

Tip 4: Remember the Pretext Concept

In disparate treatment questions, pretext is the employer's false explanation for a discriminatory decision. Look for:

• Inconsistent application of policies
• Different standards applied to different groups
• Decisions that contradict the stated reason

Example: \"The company said it hired the younger candidate because of better qualifications, but the older candidate had superior experience and education.\" This suggests pretext for age discrimination.

Tip 5: Know What Validates a Selection Tool

When disparate impact is an issue, the employer must prove the tool is validated. Valid validation requires:

• Criterion Validity: The tool actually predicts job performance
• Content Validity: The tool measures knowledge/skills essential to the job
• Construct Validity: The tool measures the psychological construct it claims to measure
• Predictive Validity: Past performance on the tool predicts future job success

If a question mentions a test or requirement in a disparate impact scenario, ask: \"Is this validated?\" If not, the employer is vulnerable.

Tip 6: Differentiate Between Burden Shifts

Disparate Treatment Burden Shift:

1. Employee proves prima facie case
2. Employer provides legitimate reason
3. Employee proves pretext

Disparate Impact Burden Shift:

1. Employee proves statistical disparity
2. Employer proves job-relatedness AND business necessity
3. Employee may still win by showing alternative practices with less impact

Tip: In disparate impact, the employer's burden is higher—they must prove business necessity, not just have a reason.

Tip 7: Watch for Red Herrings

Exam questions sometimes include irrelevant information. Focus on:

• The actual selection decision or policy
• Statistical data or evidence of intent
• Protected characteristics involved
• Whether the practice is job-related

Ignore distractions like company size, industry type, or unrelated policies unless they're directly relevant to the discriminatory practice.

Tip 8: Use Elimination Strategically

When multiple answers seem correct:

• Eliminate answers about disparate treatment if no intent is evident
• Eliminate answers about disparate impact if explicit discrimination is stated
• Eliminate answers that describe the wrong legal framework (e.g., using disparate treatment logic for a disparate impact scenario)
• Choose the answer that matches the burden-shifting framework presented in the question

Tip 9: Recognize Company Liability

Exam questions may ask about when a company is liable:

• Disparate Treatment: Company is liable for intentional discrimination by managers or the organization.
• Disparate Impact: Company is liable even without intent if a neutral policy has disparate effects unless they can prove business necessity and job-relatedness.
• Individual Manager Actions: Company may be liable for disparate treatment by individual managers under agency principles, even if official company policy prohibits discrimination.

Tip 10: Practice with Real Scenarios

Study past SHRM-CP and PHR exam questions involving discrimination. Look for:

• How the question is framed (statistical vs. intentional)
• What defenses are presented
• What evidence is used to support each party's claim
• How to calculate disparate impact
• What makes a defense valid or invalid

Tip 11: Understand Alternative Selection Practices

In disparate impact scenarios, remember that employers can:

• Use validated, job-related tests instead of blanket requirements
• Adjust cutoff scores based on job analysis
• Use banding or other statistical methods to reduce adverse impact
• Implement more inclusive recruitment to increase protected group representation
• Train hiring managers to reduce unconscious bias

If a question involves disparate impact and presents alternative practices, evaluate whether they would reduce impact while serving business needs.

Tip 12: Know Recent Legal Developments

Stay updated on important cases and concepts:

• Texas Department of Housing and Community Affairs v. Inclusive Communities Project: Disparate impact doctrine applies to housing and likely to employment practices.
• Griggs v. Duke Power Co.: Established disparate impact doctrine; employment practices must be job-related regardless of intent.
• Civil Rights Act of 1991: Shifted burden to employer to prove business necessity in disparate impact cases.

Sample Exam Questions and Answers

Question 1: Disparate Treatment Scenario

Scenario: A manager hired 8 male candidates and 2 female candidates for 10 open positions. All candidates had similar qualifications. A female applicant who wasn't hired has a documented email from the manager stating, \"I prefer to hire men for this role because they're more committed to the job.\" What type of discrimination claim is this?

Analysis: This is disparate treatment because:

• There is clear intent shown through the manager's explicit statement.
• The discriminatory comment provides direct evidence of intentional discrimination based on sex.
• The manager explicitly stated a preference based on a protected characteristic.
• The applicant can prove pretext if the stated business reason contradicts the evidence of discrimination.

Answer: This is disparate treatment. The manager's email provides direct evidence of intentional discrimination based on sex. The company is liable, and the applicant has a strong case because the discriminatory intent is explicitly documented.

Question 2: Disparate Impact Scenario

Scenario: A company requires all applicants for administrative positions to have a bachelor's degree. Statistical analysis shows that 60% of male applicants meet this requirement, while only 40% of female applicants do. The company can show that few administrators actually use advanced degree-level skills in their daily work. What type of discrimination claim is this?

Analysis: This is disparate impact because:

• The policy appears facially neutral—it doesn't explicitly mention sex or any protected characteristic.
• Statistical evidence shows the requirement disproportionately affects women: 40% ÷ 60% = 0.667 (67%), which is less than 80%.
• The company cannot defend the requirement with business necessity because job analysis shows the work doesn't require advanced degree-level skills.

Answer: This is disparate impact. Although the degree requirement is facially neutral, statistical evidence shows it disproportionately affects women. The employer cannot successfully defend it because the requirement lacks job-relatedness—the actual work doesn't require a bachelor's degree. An applicant or the EEOC could successfully challenge this practice.

Question 3: Burden of Proof Question

Scenario: An employer has a facially neutral selection test that results in 50% of white applicants being selected while only 30% of minority applicants are selected. The employer argues the test is a valid, validated predictor of job performance. Who bears the burden of proof at each stage?

Analysis: This is a disparate impact case with the following burden-shifting:

1. Plaintiff's Burden (First Step): The applicant or EEOC must prove disparate impact using statistics. Here, they've shown: 30% ÷ 50% = 0.60 (60%), which is less than 80%, establishing disparate impact.
2. Employer's Burden (Second Step): The employer must prove the test is job-related AND has business necessity. They claim validation, but the burden is on them to provide comprehensive validation evidence.
3. Plaintiff's Potential Rebuttal (Third Step): If the employer proves validity, the applicant may still prevail by showing alternative selection methods with less adverse impact that serve the employer's needs.

Answer: In disparate impact cases, the plaintiff first establishes statistical disparity. The burden then shifts to the employer to prove job-relatedness and business necessity through validation studies. The employer's claim of validity shifts the focus to whether proper validation was conducted. If validation is inadequate, the employer loses. If proper validation exists, the plaintiff may still win by showing viable alternatives with less impact.

Final Exam Preparation Checklist

• ☑ Understand the difference between intent-based (disparate treatment) and effects-based (disparate impact) discrimination
• ☑ Master the four-fifths rule calculation
• ☑ Know the McDonnell Douglas burden-shifting framework for disparate treatment
• ☑ Understand what \"business necessity\" and \"job-relatedness\" mean in disparate impact cases
• ☑ Recognize how pretext works in disparate treatment claims
• ☑ Know what makes a selection tool valid (validity types)
• ☑ Understand that disparate impact requires no intent but statistical evidence
• ☑ Recognize direct evidence of discrimination (comments, documents) vs. circumstantial evidence
• ☑ Know the difference between facially neutral and facially discriminatory policies
• ☑ Understand the three-step burden-shifting in both disparate treatment and disparate impact cases
• ☑ Practice identifying which type of discrimination is alleged based on scenario language
• ☑ Study landmark cases: Griggs v. Duke Power, McDonnell Douglas, and Texas Department of Housing
• ☑ Understand how alternative practices can defeat disparate impact defenses
• ☑ Know the protected characteristics under Title VII, ADEA, ADA, and other relevant laws
• ☑ Practice with actual exam questions from PHR, SHRM-CP, or other HR certification exams

Conclusion

Mastering disparate impact and disparate treatment is essential for HR professionals and critical for passing certification exams. Remember these key distinctions:

• Disparate Treatment = Intentional discrimination based on explicit or implied discriminatory intent.
• Disparate Impact = Unintentional discrimination resulting from a facially neutral policy that affects a protected group disproportionately.

By understanding the legal frameworks, practicing calculations, recognizing red flags in exam questions, and knowing the burden of proof in each scenario, you'll be well-prepared to answer exam questions accurately and apply these concepts professionally in your HR career. The key is to think systematically: identify the discrimination type, determine which party bears the burden of proof, evaluate the evidence and defenses, and apply the appropriate legal framework. With these exam tips and strategies, you'll confidently tackle any question on these critical employment law concepts.