What is Adverse impact ratio?
Also called Impact ratio, Selection rate ratio
The adverse impact ratio is one group's selection rate divided by the selection rate of the group selected most often. A ratio below 0.80 is the threshold at which United States federal enforcement agencies generally treat a selection procedure as showing adverse impact and expect the employer to justify it.
How it is computed
Take one stage of a hiring process and one demographic dimension. For each group, divide the number of people who passed that stage by the number who entered it — that is the group's selection rate. Divide every group's rate by the highest rate observed. The lowest resulting figure is the one people mean when they say 'the impact ratio'.
The ratio is computed per stage and per dimension. A process can be clean at the screening stage and fail at the interview stage, and the aggregate over the whole funnel can hide both.
What the number does not tell you
A ratio is a point estimate with no sample size attached, so it says nothing about how much evidence sits behind it. Two selections out of five against five out of five gives a ratio of 0.40 and means almost nothing; two hundred out of five hundred against five hundred out of five hundred gives the same 0.40 and means a great deal. Always report the group sizes beside the ratio, and pair it with a significance test.
The ratio is also silent on cause. A flagged stage may reflect the instrument, the sourcing that produced the pool, the order of the stages, or a genuine difference in the applicant population. It is a prompt to investigate, not a finding.
A worked ratio
- Group A: 60 selected of 200 applicants → selection rate 0.30
- Group B: 30 selected of 150 applicants → selection rate 0.20
- Highest rate = 0.30, so the impact ratio for Group B = 0.20 ÷ 0.30 = 0.67
- 0.67 < 0.80, so the four-fifths rule of thumb is not met and the stage warrants review.
To reach 0.80, Group B would need a rate of 0.24 — 36 selections instead of 30. Six people. Stating the remedy alongside the verdict is the difference between a diagnostic and a scoreboard.
Not the same as disparate treatment
Adverse impact is about a neutral procedure producing unequal outcomes. Disparate treatment is about deliberately treating people differently. The impact ratio speaks only to the first, and a passing ratio is not a defence against the second.
How AssessAll handles it
AssessAll ships an opt-in adverse-impact monitor for structured hiring pipelines (lib/hiring/impact.ts). It computes selection rates per group over the shortlisted, offered and hired stages, applies the four-fifths rule, and flags a group whose rate falls below 80% of the highest. Groups smaller than five are displayed but never flagged, because rates on tiny groups are noise. It works on aggregates only and never surfaces an individual's declared demographics. It is a monitor, not an independent bias audit of the kind New York City Local Law 144 requires.
Sources
Read next
Related terms
More terms beginning with A
Check a selection process against the four-fifths rule
Free, no signup, computed in your browser — with the remedy, not just the verdict.
Last reviewed