Legal Context of Assessment

Any assessment procedure used to make an employment decision (e.g., selection, promotion, pay increase) can be open to claims of adverse impact based on subgroup differences. Adverse impact is a legal concept used to determine whether there is a "substantially different" passing rate (or selection rate) between two groups on an assessment procedure (see www.uniformguidelines.com for a more detailed discussion). Groups are typically defined on the basis of race (e.g., Blacks compared to Whites), gender (i.e., males compared to females), or ethnicity (e.g., Hispanics compared to Non-Hispanics). Assessment procedures having an adverse impact on any group must be shown to be job-related (i.e., valid).

What is a "substantially different" passing rate? The Uniform Guidelines provide a variety of statistical approaches for evaluating adverse impact. The most widely used method is referred to as the 80% (or four-fifths) rule-of-thumb. The following is an example where the passing rate for females is 40% and the passing rate for males is 50%. The Uniform Guidelines lay out the following steps for computing adverse impact:

• Divide the group with the lowest rate (females at 40%) by the group with the highest rate (males at 50%)
• In this case, divide 40% by 50% (which equals 80%)
• Note whether the result is 80% or higher

According to the 80% rule, adverse impact is not indicated as long as the ratio is 80% or higher. In this case, the ratio of the two passing rates is 80%, so evidence of adverse impact is not found and the passing rate of females is not considered substantially different from males.

Agencies are encouraged to consider assessment strategies to minimize adverse impact. When adverse impact is discovered, the assessment procedure must be shown to be job-related and valid for its intended purpose.