Statistical Issues Arising in Disparate Impact Cases and the Use of the Expectancy Curve in Assessing the Validity of Pre-Employment Tests

Abstract

Disparate impact cases concern the potential adverse effect seemingly neutral employment practices, such as passing a pre-employment test or possessing a fixed level of education, have on minority applicants. Their purpose is to eliminate discrimination by subterfuge, i.e., imposing a requirement that eliminates many minority individuals who could do the job but who do not meet the requirement. When a significantly higher fraction of applicants from minority groups fail the requirement compared to majority applicants, the requirement needs to be shown to be job-related. Statistical techniques used at the various stages of a disparate impact claim are described. Properties of the expectancy curve, which describes the utility of a pre-employment test and helps in defining a band of scores defining "equivalently skilled" applicants are discussed.