Adverse Impact Assessment
Statistical analyses to assess adverse impact can be complex and have changed over time. There are many techniques used to assess the presence or absence of disparate impact. The appropriate methodology often depends on multiple factors and/or the steps in the relevant decision-making processes.
With backgrounds in labor economics, industrial/organizational (I/O) psychology, and employment relations, our experts use court-accepted analytical techniques and measures of practical and statistical significance to determine whether the data provide evidence of adverse impact in both the litigation and regulatory contexts.
BRG experts have performed analyses to test for the presence of adverse impact in a variety of employment practices, such as compensation, hiring, promotion, and termination. They also apply their extensive experience in the preparation of adverse impact analyses to evaluate allegations of discrimination in credit and lending matters, as well as in voting rights cases.
Compensation Analyses
BRG experts have extensive experience preparing compensation analyses, both on a proactive basis and for litigation. Particularly in light of recently enacted laws and promulgated regulations (such as the California Fair Pay Act of 2015), employers have become increasingly interested in assessing the relationships between pay and demographic group status (e.g., men versus women). In addition, the Office of Federal Contract Compliance Programs (OFCCP) and Equal Employment Opportunity Commission (EEOC) have demonstrated an increased interest in the gender and racial outcomes of base pay and incentive compensation decision-making processes. BRG experts also advise employers with the collection and reporting of pay data presently required by the OFCCP and the EEOC.
To properly analyze base pay and incentive compensation, BRG experts review the employer’s compensation guidelines to ensure that they have a solid understanding of the pay practices and factors that influence pay decisions. Generally, the factors that determine base pay and incentive compensation are not identical. Base pay is influenced, for example, by the level at which the employee works, the type of work performed, work experience (e.g., seniority in current job, years of company service, and experience elsewhere), education level, and field of study, as well as performance. Incentive compensation is generally influenced by the employee’s grade/level, where within the organization the individual works, and performance (both individual and company performance). The statistical technique that BRG typically uses to analyze base pay and incentive compensation is multiple regression analysis.
Once the pay models are designed and implemented, further analyses may be conducted. For example, outlier and cohort analyses may be prepared to identify employees whose pay rates are either substantially higher or lower than the model predicts. This research is often helpful in the identification of legitimate pay-influencing factors for which the model did not account; individuals who are placed in an inappropriate job category; and employees for whom pay adjustments may be warranted.
Selection Analyses: Hiring, Promotion, Transfer, and Terminations
BRG experts have extensive experience preparing analyses of the outcomes of employment selection decisions, both for litigation and proactively. Hiring, promotion, transfer, and termination (reduction-in-force (RIF)) decisions are among the types of employment selection decisions analyzed. For each type of decision, BRG experts work with their clients to understand the relevant selection processes, including the criteria used by the employer to make these decisions, as well as the relevant labor market considered for these decisions. Our experts analyze many types of data when conducting analyses of selections such as applicant flow, job posting, job interest, job history, reduction-in-force, and performance data, as well as external labor market data.
Several techniques may be used to prepare selections analyses. BRG experts apply their in-depth knowledge of employment decision-making process to identify the most appropriate method of analyzing data, which depends on the available data, selection decisions of interest, and criteria used to make the decisions.
Each analysis is conducted to determine whether a decision-making process has adversely impacted one or more demographic groups. For example, when organizations encounter economy-wide recessions, industry recessions, and/or enhanced competition, often the response is to reduce the size of their workforces through a RIF. Our experts evaluate the outcomes of RIFs to determine whether members of particular demographic group were terminated at disproportionally high rates. While RIF analyses can be analyzed retrospectively, these studies can also be performed proactively to assess and minimize the risk of adverse impact.
As part of our examination of selection issues, BRG experts have developed and validated employee selection systems across a spectrum of organizations and industries using sound scientific methods based on job analysis. These systems span positions such as automobile workers, food preparation and service workers, police officers, detectives, collections representatives, account specialists, sales representatives, customer service representatives, engineers, managers, and executives. Job analysis may also be part of these analyses of selection procedures and provides valid statistical evidence to support conclusions and recommendations.
Performance Evaluation
Performance evaluations are used frequently as a basis for pay, promotion, and termination decisions, among others. BRG experts provide statistical analysis of the outcomes of performance evaluation systems in adverse impact litigation and proactive audits.
Further, BRG experts evaluate performance appraisal systems to determine if the system design results in job-related assessments. Our expertise in studying job content allows us to assess whether performance evaluations validly measure actual performance and to offer recommendations for change, if necessary.
