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Adverse Impact and Disparate Treatment: Two Types of DiscriminationAudra H. Nelson, M.S
Learning Objectives By the end of this module, students will be able to: Define adverse impact discrimination and perform the legally accepted calculation to discern if it exists in a given situation. Define disparate treatment discrimination and understand the process used to determine if there is reason to believe discrimination has occurred. Distinguish among three types of test validity evidence and understand the steps needed to collect such evidence. Identify related HR policy and procedure implications. Slide 2 (2 minutes) Read the learning objectives to the class. Note that the terms “disparate impact” and “adverse impact” can be used interchangeably; however, disparate impact should not be confused with disparate treatment. ©SHRM 2009
Employment DiscriminationPersonnel decisions. Limitation, segregation or classification of employees or applicants. No retaliation. Title VII of 1964 Civil Rights Act Slide 3 (2 minutes) Throughout this module, we will refer to the term “unlawful employment discrimination.” This means that certain employers cannot make personnel decisions (selection for hire, promotion, termination and training; setting and adjusting compensation; allowing employees time off from work; making shift/schedule assignments) based on protected class status. A list of protected classes can be found on the following slide. It also means that employers cannot limit, segregate or classify employees or applicants in such a way that would deprive them of opportunities because of protected class status. Additionally, employers cannot retaliate against an employee who challenges a practice under federal employment law, made a charge, testified or assisted with or participated in an investigation, proceeding, or hearing under federal employment law. ©SHRM 2009
Protected Classes Other federal laws:Under Title VII of the 1964 Civil Rights Act: Race--Includes discrimination on the basis of ancestry or physical or cultural characteristics associated with a certain race (e.g., skin color, hair texture or styles). Sex National origin Religion Color--Refers to skin pigmentation (i.e., lightness or darkness of the skin), complexion, shade or tone. Color discrimination can occur between persons of different races or ethnicities, or even between persons of the same race or ethnicity. Other federal laws: Pregnancy (Pregnancy Discrimination Act). Disability (Americans with Disabilities Act). Age (Age Discrimination in Employment Act). Other. Slide 4 (2 minutes) This slide lists legally protected classes. It is illegal for most employers to take employment-related action against individuals because of membership in these protected classes. (Students should review the law to learn about which employers are covered by particular acts.) This list only highlights federal employment law and applies to most employers. Additional legally protected classes may apply depending on state and local employment laws. For example, by the end of 2008, 20 states had prohibited employment discrimination based on sexual orientation and 12 states had prohibited discrimination based on sexual orientation and gender identity. ©SHRM 2009
Disparate/Adverse Impact DiscriminationInvolves employment practices that appear to be neutral but adversely and disproportionately affect a protected class of people. Focuses on consequences and effect of practice, not intent. Pertinent evidence usually involves a comparison of selection ratios for protected classes according to the “4/5ths rule” or “Griggs Standard” (Griggs v. Duke Power Co., 401 U.S. 424 (1971)). If the selection ratio of Protected Class A is less than 80% of the selection ratio for majority Protected Class B, then statistical evidence of discrimination exists. Title VII of 1964 Civil Right Act and subsequent amendments. 41CFR60-3 – Uniform Guidelines on Employee Selection Procedures Slide 5 (8 minutes) The first type of discrimination covered in this module is called disparate or adverse impact discrimination. This type of discrimination involves employment practices that, on the surface, appear to be neutral but adversely and disproportionately affect a protected group. The focus of this form of discrimination is on the consequences of the employment practices, not intent. To establish a prima facie (Latin for “at first view”) case of discrimination, an examination of the selection ratios for protected groups must be completed. The legally accepted method of completing this examination involves the “4/5ths rule” or “Griggs Standard” (Griggs v. Duke Power Co., 401 U.S. 424 (1971)). In this case, Duke Power required a high school diploma to transfer to positions within the plant. Blacks were adversely impacted by this requirement because statistically, blacks were less likely to possess high school diplomas than whites, which caused them to be excluded from employment consideration at a disproportionate rate. As a result of this landmark case, the 4/5ths rule was established. Under the 4/5ths rule, if the selection ratio for protected class A (the minority group) is less than 80 percent of the selection ratio for protected class B (the majority group), then the plaintiff has statistical evidence of adverse impact discrimination, or there is a prima facie case of discrimination. ©SHRM 2009
Using the 4/5ths Rule to Calculate Adverse ImpactCalculate selection ratios (SR) for each group. Number of women selected divided by the number of women considered (if using sex as an example). Number of men selected divided by the number of men considered. Determine if the selection ratio of the unfavored group is less than 80 percent (4/5ths) of the selection ratio of the favored group. SR of unfavored group/SR of favored group. If resulting impact ratio is less than 80 percent, statistical evidence of adverse impact is present. 41CFR60-3 – Uniform Guidelines on Employee Selection Procedures In-class example scenarios and calculations. Slide 6 (25 minutes) Instructions for calculating adverse/disparate impact We must first calculate selection ratios for each group and determine which group is the most advantageous group (for positive actions, the higher selection rate is the most advantageous group; for negative actions, the lower selection rate is the most advantageous group). To calculate the impact ratio, we must compare the selection rates for both groups using division (for positive actions, place the most favored group’s selection rate in the denominator position; for negative actions, place the most favored group’s rate in the numerator position). Ask students for examples of positive actions and negative actions. Some positive actions include selection for promotion, hire and training. An example of a negative action is selection for layoff or termination. No matter what the situation is, the lower selection ratio should always be placed in the numerator position. See learning aids 1-4 for sample calculations and scenarios. These may be used in class or assigned for homework. If using the learning aids in class, allow five minutes per learning aid. At a minimum, to ensure students understand the 4/5ths calculation, the first two examples should be completed as a class. If the instructor desires, the remaining two examples may be assigned for homework. ©SHRM 2009
Disparate/Adverse Impact DiscriminationIf statistical evidence of adverse impact is present, there is a prima facie case for discrimination, and the employer must show job-relatedness and business necessity of the employment practice. (A discussion of how to prove job relatedness and business necessity to follow.) Attempt to identify alternative employment practice with less adverse impact. Title VII of 1964 Civil Right Act and subsequent amendments (Civil Rights Act of 1991) 41CFR60-3 – Uniform Guidelines on Employee Selection Procedures Slide 7 (2 minutes) If the results of the calculation reveal evidence of adverse impact, the burden of proof shifts to the employer to prove that the test or the employment practice in question is job-related and of business necessity. A discussion of test validation follows. Even if the employer can prove the validity of the employment practice, the plaintiff may still prevail if he/she can prove that there is an alternative selection practice that is just as job-related (valid) but with less risk of adverse impact and the employer refused to implement the alternative employment practice. For example, cognitive ability tests have a reputation for greater risk of adverse impact. Rather than use a cognitive ability test, an employer may use a topic knowledge test that more directly mirrors the content of the actual job the employee may be hired to do. ©SHRM 2009
Other Adverse Impact-Related Cases and LegislationAlbermarle Paper Co. v. Moody, 422 U.S. 405 (1975) Specified standards to argue business necessity/job relatedness (i.e., job analysis). Watson v. Ft. Worth Bank & Trust, 487 U.S. 977, 986 (1988) Subjective measures are subject to the same scrutiny of validation as objective measures. Wards Cove Packing Co. v. Antonio, 490 U.S. 642 (1989) Statistical evidence alone is not enough to prove adverse impact discrimination. Altered the definition of business necessity. Civil Rights Act of 1991 Among other things, defined business necessity in a way that more closely represents that established in Griggs v. Duke Power. Slide 8 (15 minutes) Albermarle Paper Co. v. Moody, 422 U.S. 405 (1975) The major issues of this case were the plant's seniority system, its program of employment testing and the question of back pay. Albemarle had required applicants for employment in skilled lines of progression to have a high school diploma and to pass two tests, the Revised Beta Examination (a measure of nonverbal intelligence) and the Wonderlic Personnel Test (a measure of verbal ability). Albemarle hired an industrial psychologist to study the job relatedness of its testing program. The study compared the test scores of current employees with supervisorial judgments of their competence in 10 job groupings selected from the middle or top of the plant's skilled lines of progression. The study showed a statistically significant correlation with supervisorial ratings in three job groupings for the Revised Beta Test, in seven job groupings for the Wonderlic Test, and in two job groupings for the required battery of both the Beta and the Wonderlic tests. The plaintiffs’ experts challenged the reliability (reliability is addressed in slide 14) of these studies. The court concluded that the personnel tests administered at the plant were job-related. However, the high school education requirement used with the testing was unlawful in that the personnel tests alone were adequate to measure the mental ability and reading skills required for the job classifications. Watson v. Ft. Worth Bank & Trust, 487 U.S. 977, 986 (1988) A black employee at Fort Worth Bank & Trust was rejected four times for promotion to supervisory positions in favor of white applicants. To assess the employee’s candidacy, the bank used interviews, rating scales and experience requirements that had not been subjected to validation procedures (this concept is thoroughly discussed starting on slide 9). After her fourth rejection, the employee brought a claim under Title VII of the 1964 Civil Rights Act. The bank asserted that interviews and rating scales should not be subjected to validation procedures required in disparate impact cases (i.e., that it should not be required to show that the criteria were job-related). The district court agreed, disallowing plaintiff's claim under the disparate impact theory of Title VII. Instead, the court analyzed her claim under the disparate treatment theory, which requires a plaintiff to show intentional discrimination. The court ruled that, while she had made a prima facie case of discrimination, the bank had a legitimate nondiscriminatory basis for not promoting her. The Fifth Circuit affirmed the ruling. A major result of this case was the finding that subjective measures of pre-employment testing (such as interviews) are subject to the same validation scrutiny as objective measures. Wards Cove Packing Co. v. Antonio, 490 U.S. 642 (1989) There were two types of jobs at Wards Cove: unskilled cannery jobs (filled mostly by nonwhites) and skilled noncannery jobs (mostly filled by white workers). Reason stands that the skilled jobs pay more than the unskilled jobs. A group of nonwhite cannery workers filed suit under Title VII of the 1964 Civil Rights Act, contending that Ward Coves' hiring practices were the cause for the racial division between skilled and unskilled jobs. A notable point in this case was the fact that Wards Cove contracted with a nonwhite union organization to fill most of its cannery positions. While statistical disparities did exist between the two types of jobs, it was essential to review the demographics of those who filled the jobs relative to the qualified pool of applicants available for work in each of the jobs. Results of that analysis suggested no evidence of adverse impact in the hiring practices, since the cannery and noncannery workers were representative of the pool of applicants for those jobs. Essentially, statistical evidence alone is not enough to prove disparate impact discrimination, and employee demographics must be compared to the appropriate labor pool to draw accurate conclusions about the data. In addition, Wards Cove called into question the definition of business necessity, originally established by Griggs v. Duke Power. The Griggs case established that the employer had the burden of proving that a selection requirement or procedure had a “manifest relationship” to the employment is question. The outcome of Wards Cove modified this somewhat and required the employer only to state the reasons for the employment practice or requirement and to show that the practice served the legitimate goals of the organization (even if they weren’t related to the job in question). It was up to the plaintiff to persuade that the practice is not of business necessity. Needless to say, this made disparate impact cases much easier for employers to defend. Civil Rights Act (CRA) of 1991 After much debate between the time of the Wards Cove ruling in 1989 and 1991, the Civil Rights Act of 1991 was passed. Among other things, the 1991 CRA reverted back to the general definition of business necessity established by the Griggs case--that the employment practice must be demonstrably job-related (for the position in question) and consistent with business necessity. Source: Naff, K.C. (2006). Which side can claim victory? Judicial interpretation of disparate impact theory following the 1991 Civil Rights Act. Presentation delivered at the 2006 Annual Meeting of the American Political Science Association, August 30 – September 3, 2006. ©SHRM 2009
Legal Requirements of Selection MethodsAny procedure used to select employees can be construed as a test. If a test has adverse impact, the Equal Employment Opportunity Commission (EEOC) says we must prove its validity and reliability. What is validity? What is involved in validating a test? Three Strategies to Evaluate Validity Criterion-related evidence. Content-related evidence. Construct-related evidence. 41CFR60-3 – Uniform Guidelines on Employee Selection Procedures Slide 9 (5 minutes) A Supreme Court ruling established that any procedure used to make selection decisions should be construed as a test. The EEOC states that if a test used to select employees has adverse impact on protected classes, the employer must prove validity and reliability of the test according to procedures outlined in the Uniform Guidelines on Employee Selection Procedures. Validity: What a test or other procedure measures and how well it measures it. The appropriateness (meaningfulness/usefulness) of inferences made and actions taken based on test scores and measures. Validation: The process of collecting evidence to support or not support the use of tests and measures. There are three strategies used to evaluate validity. Each one will be covered in detail. ©SHRM 2009
Criterion-Related Evidence of ValidityIs there a statistical relationship between a predictor and a criterion? Predictor: Something used to predict some outcome related to a job (e.g., pre-employment tests, GPA, interview ratings). Criterion: Some outcome associated with job success (e.g., performance ratings, attendance, tenure). 41CFR60-3 – Uniform Guidelines on Employee Selection Procedures Slide 10 (2 minutes) Criterion-related evidence: This involves collecting data and using correlation analysis to determine the relationship between a predictor and a criterion of job success. A predictor is something that predicts job success (e.g., pre-employment test scores, GPA, interview ratings, education, work experience and personality traits). A criterion is an outcome associated with job success (e.g., performance review ratings, production data, absenteeism/tardiness, tenure). Ask students to identify other potential predictors and criteria. ©SHRM 2009
Correlation Analysis A statistical procedure used to determine the extent to which two or more variables are related to each other. Represented by a correlation coefficient = r (a number between -1.0 and +1.0). Positive correlation, negative correlation and significance of correlation coefficient. Cohen, J. & Cohen, P. (1983). Applied Multiple Regression/Correlation Analysis for the Behavioral Sciences, 2nd Ed. Slide 11 (5 minutes) Correlation is the extent to which two or more variables are related to each other. Correlation analysis is a statistical procedure used to determine the extent to which two or more variables are related to each other. Results of a correlation analysis are reported using a correlation coefficient (r), a number that ranges from -1.0 to A positive correlation is represented by a positive r and indicates that as scores on one variable go up, so do scores on the other variable. The closer the r is to +1.0, the more positive the relationship is. A negative correlation is represented by a negative r and indicates that as one variable goes up, the other variable goes down. The closer the r is to -1.0, the more negative the relationship is. A correlation analysis is used to determine the relationship between a predictor and a criterion. Example: Obtaining an r of +.40 between grade point average (GPA) and work performance reviews means that the higher the GPA, the higher the work performance review ratings will be. Obtaining a -.50 between integrity test scores and absenteeism means that the higher one scores on the integrity test, the lower the absentee rate. Ask students to provide other examples (alcohol consumption and motor coordination, study time and test scores; attendance and course grade) so they get a good idea of correlations between positive and negative variables. There is no minimum correlation that is acceptable in all employment situations. One must perform additional statistical procedures to determine whether the correlation is statistically significant. To discuss those procedures in detail here would be beyond the scope of this training module. However, most scientists accept that a correlation is significant at the alpha less than .05 level. Alpha of less than .05 says that there is a less than 5 percent chance that the relationship between two or more variables is due to chance or coincidence. Therefore, a correlation coefficient of .25 could yield criterion-related evidence of validity if that correlation is statistically significant (that is, there is a less than 5 percent possibility that the relationship between predictor and criterion is due to chance or coincidence). Criterion-related evidence of validity is the type of evidence that stands up in court, but it takes a lot of time, effort and resources to conduct a criterion-related validity study. ©SHRM 2009
Criterion-Related Validity Study MethodsPredictive validity: Measured when test results of applicants are compared with subsequent job performance (or some other criteria). Concurrent validity: Measured when employer measures current employees and correlates their scores with their current performance ratings (or some other criteria). 41CFR60-3 – Uniform Guidelines on Employee Selection Procedures Slide 12 (7 minutes) There are two basic ways to perform a criterion-related validity study: Predictive validity study. This involves identifying a predictor, such as a test, and administering the test to the entire applicant pool, selecting employees regardless of test scores, and at some future point (six months, one year, two years), performing a correlation analysis between the test scores and a criteria, such as performance ratings to see if a relationship exists between the test score (predictor) and performance ratings (criterion). This is the best method to use to establish criterion-related evidence of validity, but it is time-consuming and expensive. 2. Concurrent validity study. This involves identifying a predictor, such as a test, administering the test to the current population of workers and performing a correlation analysis to determine whether test scores are related to some criteria (job performance). While this can be done relatively easily and inexpensively, study constraints can influence results. Such constraints might include a non-representative sample if poorer performers are not included in the study because they either left or were terminated already, so only good performers are included in your study. ©SHRM 2009
Other Strategies to Evaluate ValidityContent-related evidence of validity: Does the content of the selection method represent the requirements of the job? Established through job analysis. Construct-related evidence of validity: Does the test measure what it says it measures? Validity generalization 41CFR60-3 – Uniform Guidelines on Employee Selection Procedures Slide 13 (10 minutes) With content-related evidence, there is sometimes a concern with whether a measurement procedure contains a fair sample of the range of situations it is supposed to represent. Content-related studies assess the degree to which the content of a selection method represents (or assesses) the requirements of the job and is assessed through job analysis. The process involves some level of subjectivity. Example: A knowledge-based test such as the CPA exam could be considered to have content validity for an accounting job. Construct-related evidence helps answer the question of whether a test measures what it says it measures or whether it measures a construct determined to be important for job success (or some other criteria). This involves having a good understanding of a trait (or construct) that a test measures. If the test is designed to measure spatial ability, does it measure spatial ability? One place to begin understanding whether the test measures what it is supposed to measure is to administer other tests that claim to measure the same thing. Test takers should score similarly on all the tests if they measure the same thing. Validity generalization: Most often, if a test has been purchased from a vendor, the vendor has already performed validity studies. The theory behind validity generalization is that if the test was valid in Company A in Industry 1, then it should be valid in Company B in Industry 1. If contemplating the purchase of a selection test, it is wise to request this validity evidence from the vendor before using the test in your organization. ©SHRM 2009
Reliability Reproducibility of results:Precision. Consistency. Test-retest: One method to determine reliability. Aron, A. & Aron, E.N. (1997). Statistics for the Behavioral Sciences: A Brief Course. Prentice-Hall. Slide 14 (5 minutes) Reliability refers to the reproducibility of results obtained from a particular predictor. Reliability may estimate the precision of a particular procedure as a measuring instrument and/or it may estimate the consistency of performance on the procedure by the test takers. There are numerous methods that may be used to assess reliability. To discuss all of them is beyond the scope of this learning module. Probably the most useful method to assess reliability in this case is the test-retest method. The test-retest method involves administering the same form of a test (or other measurement procedure) to the same group of people on two different occasions. Their scores should be relatively similar on the two occasions, assuming that no learning has taken place between the first test and the second test. This is the simplest and most direct estimate of reliability. ©SHRM 2009
Important Notes About Validity and ReliabilityA test can be reliable without being valid. A test cannot be valid without being reliable. All aspects of reliability and validation studies must be fully documented. 41CFR60-3 – Uniform Guidelines on Employee Selection Procedures Slide 15 (5 minutes) A test or other predictor can be reliable without being valid (e.g., people can score consistently on a test, yet the test can still be unrelated to a job or non-predictive of job performance). A test cannot be valid if it is not reliable (e.g., if there is no rhyme or reason to test scores, then surely your test is not valid). All steps of the reliability and validity studies must be fully documented as outlined in the Uniform Guidelines. ©SHRM 2009
Disparate Treatment DiscriminationAn act of discrimination that involves treating an employee or applicant differently from another employee or applicant because of membership in a protected class. Focuses on consequences/effects and intent. McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). Title VII of 1964 Civil Rights Act and subsequent amendments. Slide 16 (5 minutes) Disparate treatment involves treating an employee or applicant differently from another employee or applicant based on (or at least partly based on) membership in a protected class and is a form of intentional discrimination (e.g., an employer hires men with small children but not women, refusing to hire a female because she is pregnant). McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973) In this case, an African American civil rights activist engaged in disruptive and illegal activity to protest that his termination as an employee of McDonnell-Douglas Corporation was racially motivated. When McDonnell-Douglas advertised for qualified personnel and rejected Green’s re-employment application on the ground of the illegal conduct, Green filed a complaint with the Equal Employment Opportunity Commission (EEOC) charging violation of Title VII of the Civil Rights Act of The EEOC found reasonable cause to believe that McDonnell-Douglas Corp.’s rejection of Green’s re-employment application violated the Act, which forbids discrimination against applicants or employees for attempting to protest or correct allegedly discriminatory employment conditions. The court made no finding on Green’s allegation that the McDonnell-Douglas had also violated the section which prohibits discrimination in any employment decision. ©SHRM 2009
Disparate Treatment DiscriminationPlaintiff’s burden: Event occurrence: Member of protected class, applied for job/promotion, rejection, job remained open or filled by someone else. Direct evidence: Tape recording or writing of wrongfulness. Circumstantial evidence and analysis of similarly: Situated others – ambiguous remarks, history of related behavior, how others in same protected class have been treated. Defendant’s response. Plaintiff’s additional burden. In-class activity. Title VII of 1964 Civil Rights Act and subsequent amendments. Slide 17 (15 minutes) Plaintiff must first show that he/she is part of a protected class; that he/she applied for a job/promotion etc.; was rejected, but the job remained open or was filled by someone else, which in all establishes a prima facie case for discrimination. Additional pertinent evidence needed: direct evidence (e.g., tape recording or in writing of wrongfulness) or circumstantial evidence (a comparison of similarly situated others or individuals who occupy the same situation). To the extent that there are: More similarly situated others with different protected classes who are treated differently from the charging party (more hired, promoted, etc.). Fewer similarly situated others with same protected class who are treated differently from charging party (fewer hired, promoted, etc.). Fewer similarly situated others with different protected classes who are treated the same as the charging party (fewer not hired, promoted, etc.). Other circumstantial evidence may include prior comments (perhaps derogatory in nature) jokes or other past behavior that may suggest validity to the discrimination claim. The employer is then given an opportunity to articulate the basis of their decision (e.g., another candidate more qualified; the charging party not qualified because of ___). Burden of proof then shifts back to plaintiff who must show that the employer’s response was untrue or based on pretext. In-class activity: 30 minutes. ©SHRM 2009
Implications for HR DepartmentsManagement training. Anti-discrimination policy and complaint procedure. Sensitivity training. Review procedure for employee documentation and personnel decisions. Regular analysis of demographic data. Treat employment-at –doctrine as a shield not as a weapon. Other? Slide 18 (5 minutes) Slide 18 should be discussed following completion of disparate treatment discrimination exercise. Here are some things for HR professionals to consider implementing to mitigate risk of unlawful discrimination. Ensure that managers are adequately trained on what is prohibited under EEO and other employment laws. Develop and communicate to all employees on a regular basis the organization’s anti-discrimination policy and complaint procedure. Provide gender, race, religion, generational and other protected class sensitivity training to all employees. Develop a procedure for review of employee termination, promotion and other personnel decisions and require relevant documentation for all personnel actions. Many organizations require a one-up management review and even an HR review of documentation before undertaking major actions with employees. Review organizational demographic data on a regular basis to identify minority and female under-representation in the organization. Federal government contractors and other organizations with affirmative action programs review their organization’s demographic data at least annually to ensure adequate representation of women and minorities and employee good-faith efforts to achieve and maintain that representation. Although many states follow an employment-at-will doctrine, employers must not rely on this. Organizations may benefit from the employment-at-will doctrine by using it as a shield, not as a weapon. Ask students to identify any other implications for HR to consider. ©SHRM 2009
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