Disparate impact in the law of the United States refers to practices in employment, housing, and other areas that adversely affect one group of people of a protected characteristic more than another, even though rules applied by employers or landlords are formally neutral.
Although the protected classes vary by statute, most federal civil rights laws consider race, color, religion, national origin, and sex to be protected characteristics, and some laws include disability status and other traits as well.
A violation of Title VII of the 1964 Civil Rights Act may be proven by showing that an employment practice or policy has a disproportionately adverse effect on members of the protected class as compared with non-members of the protected class.
"[2] Where a disparate impact is shown, the plaintiff can prevail without the necessity of showing intentional discrimination unless the defendant employer demonstrates that the practice or policy in question has a demonstrable relationship to the requirements of the job in question.
[7] The idea of disparate impact has been applied within the EU with respect to systemic discrimination and substantive equality.
[10][11] While disparate impact is a legal theory of liability under Title VII, adverse impact is one element of that doctrine, which measures the effect an employment practice has on a class protected by Title VII.
In the Uniform Guidelines on Employee Selection Procedures, an adverse impact is defined as 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".
However, having adverse impact does mean that there is the "potential" for discrimination in the hiring process and it could warrant investigation.
[13] The 80% test was originally framed by a panel of 32 professionals (called the Technical Advisory Committee on Testing, or TACT) assembled by the State of California Fair Employment Practice Commission (FEPC) in 1971, which published the State of California Guidelines on Employee Selection Procedures in October 1972.
This implies that discrimination is presumed to exist if 0.4% of the variation in outcomes is explained and there is a 0.123 standard deviation difference between two groups.
Both of these quantities are small enough that there are significant concerns about finding false positive instances of discrimination at an unacceptable level.
A greater threshold for presuming that disparities are due to discrimination, such as an odds ratio of 2–3, is less likely to have false positives.
This form of discrimination occurs where an employer does not intend to discriminate; to the contrary, it occurs when identical standards or procedures are applied to everyone, despite the fact that they lead to a substantial difference in employment outcomes for the members of a particular group and they are unrelated to successful job performance.
[20] This is because disparate impact only becomes illegal if the employer cannot justify the employment practice causing the adverse impact as a "job related for the position in question and consistent with business necessity" (called the "business necessity defense").
The ten federal appellate courts that have addressed the issue have all determined that one may establish a Fair Housing Act violation through the disparate impact theory of liability.
[22] Until 2015, the U.S. Supreme Court had not yet determined whether the Fair Housing Act allowed for claims of disparate impact.
Both cases settled before the Supreme Court could issue a decision; the Obama administration had encouraged settlement, as civil rights groups feared that a Supreme Court ruling on the issue would be hostile to disparate impact theories, and thus weaken housing discrimination enforcement.
[23][24] On June 25, 2015, by a 5–4 decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., the Supreme Court held[7] that disparate-impact claims are cognizable under the Fair Housing Act.
In an opinion by Justice Kennedy, "Recognition of disparate-impact claims is also consistent with the central purpose of the FHA, which, like Title VII and the ADEA, was enacted to eradicate discriminatory practices within a sector of the Nation's economy.
Suits targeting unlawful zoning laws and other housing restrictions that unfairly exclude minorities from certain neighborhoods without sufficient justification are at the heartland of disparate-impact liability...Recognition of disparate impact liability under the FHA plays an important role in uncovering discriminatory intent: it permits plaintiffs to counteract unconscious prejudices and disguised animus that escape easy classification as disparate treatment."
For example, if an hypothetical fire department used a 100-pound test, that policy might disproportionately exclude female job applicants from employment.
Under the 80% rule mentioned above, unsuccessful female job applicants would have a prima facie case of disparate impact "discrimination" against the department if they passed the 100-pound test at a rate less than 80% of the rate at which men passed the test.
Thus, the employer would have intentionally discriminated against the successful male job applicants because of their gender, and that likely amounts to illegal disparate treatment and a violation of the Constitution's right to equal protection.
In the 2009 case Ricci v. DeStefano, the U.S. Supreme Court did rule that a fire department committed illegal disparate treatment by refusing to promote white firefighters, in an effort to avoid disparate impact liability in a potential lawsuit by black and Hispanic firefighters who disproportionately failed the required tests for promotion.
Even before Ricci, lower federal courts have ruled that actions taken to avoid potential disparate impact liability violate the constitutional right to equal protection.
Thomas Sowell has argued that assuming that disparities in outcomes are caused by discrimination is a logical fallacy.
While admitting that there are many legitimate and race-neutral reasons for employers to screen out convicted criminals and debtors, the EEOC presented the theory that this practice is discriminatory because minorities in the U.S. are more likely to be convicted criminals with bad credit histories than White Americans.
"By bringing actions of this nature, the EEOC has placed many employers in the "Hobson's choice" of ignoring criminal history and credit background, thus exposing themselves to potential liability for criminal and fraudulent acts committed by employees, on the one hand, or incurring the wrath of the EEOC for having utilized information deemed fundamental by most employers.
Something more... must be utilized to justify a disparate impact claim based upon criminal history and credit checks.
After correction for the potentially confounding variables in a regression model, we should be able to tell if there is still an impact of group membership on the quantity of interest.