What is Disparate Effect?
A disparate effect is an adverse consequence resulting from an institution’s treatment of some populations differently from the way it treats other populations.
A disparate effect is an exclusionary or discriminatory result of an employment policy or practice. When a legal review of contested employment practices finds a disparate effect on hiring, advancement, termination, or compensation, it often means that the policy or practice is unfair.
Disparate effects occur when an institution, such as a government agency, develops a policy and then implements it unevenly. For example, the Earned Income Tax Credit (EITC) is designed to support low-income working families. However, some states, such as California, do not include the EITC within their state income tax code.
Why is disparate effect necessary?
Our society would be much less fair and just if we didn't apply the disparate effects. Disparate effect help to ensure that everyone has an equal opportunity to succeed and that no one is unfairly disadvantaged simply because of their race or ethnicity.
The disparate effect occurs when a job applicant, who doesn't meet the requirements, is given the job due to a less qualified worker. The employer loses valuable time, money, and reputation.