Adverse Impact

Adverse impact occurs when a seemingly neutral employment practice disproportionately excludes members of a protected group. Under the EEOC's Uniform Guidelines, adverse impact is typically measured using the four-fifths (80%) rule: if the selection rate for a protected group is less than 80% of the rate for the group with the highest selection rate, adverse impact may exist. AI hiring tools can create adverse impact through biased training data, proxy variables, or algorithmic design choices that correlate with protected characteristics like race, gender, or age.