What is the meaning of disparate impact?
What is the meaning of disparate impact?
Disparate impact is often referred to as unintentional discrimination, whereas disparate treatment is intentional. Disparate impact occurs when policies, practices, rules or other systems that appear to be neutral result in a disproportionate impact on a protected group.
What is disparate impact in banking?
Disparate Impact. A disparate impact occurs when a lender applies a racially (or otherwise) neutral policy or practice Page 3 Federal Fair Lending Regulations and Statutes: Overview equally to all credit applicants but the policy or practice disproportionately excludes or burdens certain persons on a prohibited basis.
What is an example of disparate impact?
Disparate impact refers to discrimination that is unintentional. The procedures are the same for everyone, but people in a protected class are negatively affected. For example, say that job applicants for a certain job are tested on their reaction times, and only people with a high score are hired.
What is disparate treatment in fair lending?
Disparate treatment occurs when a lender treats a credit applicant differently based on one of the prohibited bases. It does not require any showing that the treatment was motivated by prejudice or a conscious intention to discriminate against a person beyond the difference in treatment itself.
How is disparate impact proven?
To establish an adverse disparate impact, the investigating agency must (1) identify the specific policy or practice at issue; (2) establish adversity/harm; (3) establish significant disparity; [9] and (4) establish causation.
How can we prevent disparate impact?
Dos and Don’ts of Hiring to Avoid Disparate Discrimination
- DO: Clearly define job responsibilities.
- DON’T: Require specific physical traits or genders.
- DO: List specific job skills.
- DON’T: Go overboard with requirements.
- DO: Ask everyone the same interview questions.
- DON’T: Ask Illegal questions.
How do you identify disparate impact?
What are the elements of disparate impact?
How can adverse impact be proven?
Adverse impact can occur 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. Typically, adverse impact is determined by using the four-fifths or eighty percent rule.
What is the legal definition of disparate impact?
Legal Definition of disparate impact. : an unnecessary discriminatory effect on a protected class caused by a practice or policy (as in employment or housing) that appears to be nondiscriminatory — compare bona fide occupational qualification, disparate treatment.
Are there limits to the disparate impact theory?
The Supreme Court has put limits on the disparate impact theory. For example, the Court has made it clear that it is not unlawful for an employer to apply different standards of compensation or different terms or conditions of employment to employees, if the employer acts according to a legitimate seniority system.
Which is the best definition of disparate treatment?
In other words, disparate treatment is the type of discrimination most people think about.
Which is an example of disparate impact in hiring?
The Rule required employers’ hiring practices to maintain an 80% hiring ratio. In this example of disparate impact in hiring, the ratio is 10:40, which places the difference in minorities hired at 25%. ABC company would need to either step up its practice of hiring more women, or provide legitimate reasons for hiring more men than women.