Diversity & Inclusion

CCE Offers Report on Adverse Impact Analyses

The Washington, D.C., nonprofit research and think tank organization, the Center for Corporate Equality (CCE) has issued a detailed report on “best practices” for conducting the adverse impact analyses, which are used to detect and sometimes litigate employment discrimination claims. The editors of Federal Employment Law Insider interviewed David Cohen, who is on the board of directors at CCE and is the president of DCI Consulting Group, Inc., and a coauthor of the report, and Eric Dunleavy, senior consultant at CCE and DCI Consulting Group, Inc.

Insider: Mr. Cohen and Mr. Dunleavy, thanks for meeting with us today. Can you provide our readers with an overview of the report that is being issued by CCE?

Cohen and Dunleavy: CCE’s Technical Advisory Committee (TAC) Report on Adverse Impact Analyses is a significant report that takes into consideration the views of many different experts on adverse impact issues. The report provides the views of a large, diverse TAC that includes industrial/organization psychologists, attorneys, labor economists, ex-government officials, and human resources professionals. As a result of extended efforts by the TAC, best practices have been identified about how adverse impact analyses should be conducted and used to assess whether a wide range of employment practices potentially have unlawful impact on applicants or employees. The full report is available to the public, at no charge, on CCE’s website at www.cceq.org.

Insider: Why is the Report on Adverse Impact Analyses important?

Cohen and Dunleavy: It is critical to understand whether key workforce decisions, including selections, promotions, and termination decisions, result in adverse impact. Currently, there is no field manual and little guidance of any type about the proper way in which these analyses should be conducted with regard to data structure, whom to include and exclude in analyses, what statistical methods are most appropriate, how to interpret results, etc. This lack of guidance is problematic in that it is not unusual for professionals in the same organization to disagree about how these analyses should be conducted, and it is certainly not unusual for plaintiffs, government enforcement agencies, and defendants to disagree. CCE prepared the report to determine if there are “best practices” in conducting adverse impact analyses and to begin to fill the gap on substantive guidance for conducting the analysis of employment decisions.

Insider: How was the report prepared?

Cohen and Dunleavy: CCE created a TAC consisting of 70 of the nation’s top experts in adverse impact analyses. The TAC members included a wide variety of [equal employment opportunity (EEO)] experts, including industrial-organizational psychologists, labor economists, plaintiff and defense attorneys, HR practitioners, and former [Office of Federal Contract Compliance Programs (OFCCP)] and [Equal Employment Opportunity Commission (EEOC)] officials. The first step in the process was to administer a detailed questionnaire that asked TAC members to indicate how they would handle a variety of data, statistical, and legal interpretation issues commonly encountered in conducting adverse impact analyses. The survey results were used to identify topics where there was strong agreement as well as topics where there was strong disagreement. Results of this survey were used to structure the agenda for an in-person two-day meeting in Washington, D.C. The resulting recommendations were combined with the survey results to create a best practice document that was distributed without cost to members of the EEO community on September 15, 2010.

Insider: Did you share your results with the key workplace enforcement agencies, including the EEOC, the U.S. Department of Labor’s OFCCP, and the U.S. Department of Justice’s (DOJ) Civil Rights Division?

Cohen and Dunleavy: Yes, we did brief the federal enforcement agencies. As a courtesy, one week prior to the public release of the best practices report, members of CCE briefed representatives from the OFCCP, EEOC, and [DOJ] on the TAC findings.

Insider: What were the reactions of the EEOC, OFCCP, and DOJ?

Cohen and Dunleavy: The agencies were appreciative of the work that had gone into the project and were extremely interested and engaged during the meeting.

Insider: The question of adverse impact analysis is a highly technical legal and statistical set of considerations. Can you help our readers understand how well-counseled employers can use these analyses in their day-to-day operations?

Cohen and Dunleavy: Sure, there are numerous examples of employment decisions that come into consideration. For example, in evaluating the effects of a company’s hiring program and related employment decisions, the report identifies that there are many key issues that need to be understood. Examples of these issues include understanding the difference between a job seeker and a job applicant [and] determining the criteria for considering someone as an “applicant” in an adverse impact analysis. The report notes that the advisory committee members agreed that to be considered an applicant, a job seeker must meet the following criteria: express an interest in an open position with the employer; properly follow the employer’s rules for applying; meet the basic qualifications for the job; actually be considered by the employer; and not withdraw from the application process.

Insider: Are there additional examples of how these recommendations can assist employers?

Cohen and Dunleavy: Yes, the hiring process has many facets that the report considers and [for which it] offers recommended best practices. The report addresses how a company should handle applicants who submit more than one application for an open position in conducting an adverse impact analysis. The committee agreed that in most situations job seekers who submit more than one application for open jobs should be counted an applicant just once in the adverse impact analysis.

Insider: Does the report address how to respond when persons fail to provide race/ethnicity and gender data that is required for record keeping relating to employment decisions?

Cohen and Dunleavy: Yes, the report addresses the challenges employers face in complying with the obligations to track race/ethnicity and gender data, and whether organizations should “guess” the gender or race of applicants who do not self-identify their race and/or gender. If an applicant does not self-identify race or gender, the report advises that employers not try to guess race or gender from other information contained in the application. Committee members were divided on whether employers should try to “backfill” applicant race or gender data once they meet the candidates and are able to determine such identification.

Insider: What is one of the biggest surprises coming out of the report?

Cohen and Dunleavy: We were surprised that the TAC reached agreement that one should consider both statistical and practical significance measures when determining whether a meaningful disparity exists. Many in the EEO community have recently relied primarily on statistical significance testing to assess whether a disparity is likely due to chance. However, this method is heavily influenced by sample size and may be trivial in some situations. A majority of TAC members recommended considering both statistical significance and practical significance (i.e., the actual size of the disparity) together in assessing whether impact is substantial. One thing to note is the TAC could not reach consensus on preferred practical significance measures and stressed the importance of “context.”

Insider: What is the goal of CCE in providing this report?

Cohen and Dunleavy: We have provided the report at no charge to the public to benefit the EEO community and to assist in developing and implementing uniform steps for conducting adverse impact analyses. This will ultimately benefit all stakeholders when assessing these critical employment decisions.