What is Adverse Impact?

Adverse impact is the effect that occurs when an employer’s seemingly neutral practices have a disproportionately negative effect on members of a protected group (e.g. race, ethnicity, sex).

Federal Contractors are required to assess personnel activity to determine whether there are selection disparities as a part of their Affirmative Action program.
Personnel activity typically includes:

  • Hires and selections
  • Applicant flow
  • Promotions
  • Terminations

It is important to note that, just because an indicator exists, it does not necessarily mean discrimination occurred. As a federal contractor, however, when indicators arise, you have an obligation to research each step in the process to ensure that no discrimination or discriminatory practices have occurred.

How to Start Researching Personnel Disparities

To thoroughly research indicators is a lengthy process, much too long to explain in this short guide, so let’s look at a few basic things you can do to begin your research. In this article, we will take a look at where to begin if OFCCP starts impact at the Job Group Level, a very high level.

Hires vs. Applicants

  • Make sure your data is clean and accurate:
    • Look for duplicate applicants within a requisition
    • Look for requisitions in your data with no hire and remove them 
    • Look for missing race/gender for hires (hires only)
    • Make sure titles are assigned to the appropriate job group
  • Review disposition codes to ensure that they are accurate:
    • Check for the use of mass-coding
    • Determine if a data management technique (DMT) was used and document how it was used for each requisition
    • Check that the disposition codes are counted in accordance with the Internet Applicant Rule; ensure you know which codes qualify individuals as "applicants" and which codes are "not applicants"
  • See if you can narrow your focus – a job group may contain many titles and requisitions.
  • Pull and thoroughly review each job posting/listing checking for objective qualifications and barriers to employment.
  • Remember any data change/correction could mean a decrease OR increase in the indicator, but most importantly, you want accurate codes that are defensible.

Now that we've taken a look at hires vs. applicants data, let's take a look at promotions and terminations.


  • Review the promotion log to ensure that all actions are truly considered promotions.
  • Ensure that you can identify every promotion as either a progressive step or a competitive promotion.
  • If there are competitive promotions, make sure you can identify the applicant pool.
  • Consider re-analyzing the promotions in two groups; competitive and then non-competitive.


  • Identify voluntary and involuntary terminations and consider analyzing them separately.
  • Ensure you have appropriate documentation for every termination.
  • If there were reductions or layoffs, ensure you have proper documentation and consider doing a separate analysis just for those groups.
  • Look for trends; for example, is there a specific protected group leaving in one particular area?

Now that the easy part is done, you can begin the deep dive research!