What does "disparate impact" refer to in employment law?

In employment law, "disparate impact" refers to employment practices that may seem neutral on the surface but result in a disproportionate adverse effect on a protected group. This concept addresses situations where a seemingly neutral policy or practice, such as a hiring exam or a standard qualification requirement, leads to significant differences in outcomes for different demographic groups, such as race, gender, or age.

For example, if a company uses a specific test for hiring that is not directly related to the job's requirements and a significant number of applicants from one racial group fail the test compared to applicants from other groups, this could be considered a case of disparate impact. The law requires employers to demonstrate that such practices are job-related and necessary for the operation of the business to avoid liability for discrimination claims under federal laws such as Title VII of the Civil Rights Act of 1964.

Understanding disparate impact is crucial for organizations aiming to maintain fair employment practices and comply with anti-discrimination laws. It highlights the importance of evaluating not just the intentions behind employment policies, but also their actual effects on various groups in the workforce.