Humans are (in many ways) hardwired for bias—it can be a major challenge in recruiting, social interactions, and everyday life. We all see the world through different lenses, and those lenses lead to real consequences. In many cases, these are harmless. Maybe you prefer coffee to tea or think cats are better than dogs… no big deal.
But, when biases are left unchecked in recruitment, they can have negative consequences.
Adverse impact is the concept used to describe these negative consequences. It occurs when employment practices disproportionately affect protected groups—and it’s a big problem in the workplace.
So, if you’re involved in the hiring process, it’s important to understand what adverse impact is and how you can reduce it. In this Willo guide, we’ll explore the concept of adverse impact, how to test for it (the four-fifths rule and two statistical checks, with the math worked through), and how to reduce it; which is less about any single tool and more about how you make the decision.
Let’s begin
What adverse impact is, and why it shows up in hiring
To put the definition more precisely: adverse impact is measured at the level of a group, not a single decision. It occurs when an employment practice [a screening question, an assessment, a promotion rule] disproportionately excludes a protected group.
Under United States law adverse impact is treated as a statistical concept. Which means: you don’t prove adverse impact by pointing at intent, you prove it by comparing selection rates. A practice can be completely well-meaning and still produce it.
This is also what separates adverse impact from disparate treatment, the other main form of hiring discrimination. Disparate treatment is intentional: an individual is treated differently because of a protected characteristic. Adverse impact, sometimes called disparate impact in US law, is the unintentional counterpart: a neutral practice applied to everyone that still produces a disproportionate result for a protected group.
Here’s the shape of it.
Say a role pulls 200 applications with roughly equal qualifications: 95 from men, 100 from women, 5 from non-binary applicants. If 90% of the people invited to interview are men, that’s evidence of adverse impact — women and non-binary applicants are being filtered out at a rate the numbers can’t explain by chance. Nobody had to decide “screen out the women” for the pattern to be real. That’s exactly why it’s dangerous: it hides inside processes that feel fair to the people running them.
The good news is that because it’s statistical, it’s detectable before it becomes a legal or reputational problem. You can measure it. Three methods do most of the work.
How to test for adverse impact
The four-fifths (80%) rule
The four-fifths rule is the quickest check, and it’s the one the U.S. Equal Employment Opportunity Commission (EEOC) uses as a first screen for discrimination claims. The rule: if a protected group’s selection rate is less than 80% of the majority group’s selection rate, you may have an adverse impact worth investigating.
Work it in two steps:
- Calculate each group’s selection rate — people hired or advanced, divided by applicants from that group. If 80 of 100 non-disabled applicants advance, that’s an 80% selection rate. If 5 of 20 disabled applicants advance, that’s 25%.
- Apply the 80% threshold — 80% of the majority rate (80%) is 64%. The rule says the disabled group’s rate should be at least 64%. At 25%, it’s far below. That’s strong evidence of adverse impact.
The four-fifths rule is easy to run and easy to explain to a hiring team, which is its whole value. It’s also the least precise of the three methods, so treat it as a flag, not a verdict.
The chi-square test
There are non-discriminatory reasons two groups can have different selection rates, and the four-fifths rule can’t tell the difference. A chi-square test can. It compares the number of people actually selected from each group against the number you’d expect if selection rates were consistent across all groups.
Take 120 applicants (100 non-disabled, 20 disabled) and 85 hires (80 non-disabled, 5 disabled):
- Overall selection rate: 85 ÷ 120 × 100 = 70.8%.
- Expected hires per group: non-disabled, 100 × 70.8% ≈ 71; disabled, 20 × 70.8% ≈ 14.
- Compare expected to actual: non-disabled came in at 80 (+9); disabled at 5 (−9). A gap that size is a signal.
- Calculate the p-value to know whether the gap is more than chance. Unless you have a statistics background, use an online chi-square calculator — feed it the expected and actual counts and it returns the p-value. A low p-value means the difference is statistically significant, and adverse impact is likely present.
The chi-square test is more rigorous than the four-fifths rule, but it only behaves well with large data sets. For a small applicant pool, use the next one.
Fisher’s exact test
Fisher’s exact test is the small-sample alternative to chi-square. It calculates the probability that your results could have occurred by chance if there were no real difference between the groups. A probability below 5% points to potential adverse impact. Social Science Statistics and similar sites host free Fisher’s exact calculators, so you enter your numbers and read the p-value rather than doing it by hand.
All three have trade-offs. The four-fifths rule is the most intuitive and the least precise. Chi-square is more powerful but needs volume. Fisher’s exact test is the reliable compromise for smaller pools. Run whichever fits your data, and re-run it whenever your process or applicant mix changes.
How to reduce adverse impact by structuring the decision
The tests tell you whether you have a problem. They don’t fix it. What reduces adverse impact is cutting the room for bias in the decision itself, and here the research is unusually consistent.
1. Structured employment interviews
A structured interview is exactly what it sounds like—an interview process with clear guidelines that prevent recruiters and hiring managers from relying on gut instinct alone.
At the most basic level, this means using the same set of questions for every candidate. But, for the best results, you can also standardize almost every aspect of interviews and screens, including:
- Time limits
- Question order
- Review and evaluation criteria
- Interviewer disposition
How can you implement all this? By switching to async video interviews. Here at Willo, we offer an asynchronous screening solution that helps standardize interviews and screens while also reducing the potential for bias.
You can use our intelligent question generator to create questions for the interviews. The tool only gives you questions that are highly relevant to the role. As a result, you can keep any interview question-induced adverse impact to a minimum.
After deciding on your questions, use them to set up and publish an interview directly on Willo. We also allow you to decide on duration, number of retakes, and time to think. It’s so easy that you can finish the entire setup within minutes.
After publishing your interview, we provide you with invite links to send to interviewees. They can respond to the questions via video, text, or audio on their own time without any pressure from you or anyone else.
2. Create interview scorecards
Structured interviews are a great first step, but they can be even more effective when paired with interview scorecards.
An interview scorecard lists the key qualities you’re seeking in a candidate, like communication, willingness to learn, and enthusiasm. Then, each quality would have defined rating scales (e.g., "Strong no,” "No," "Maybe," “Yes,” “Strong Yes”), and interviewers would rate each candidate on these scales.
This allows you to keep your evaluation process transparent, leaving no room for bias.
We can lend you a hand here, too…
After your candidates submit their responses on Willo, invite your hiring team to collaborate and create an assessment scorecard for responses.
Then, you can simply rank and compare the Willo scorecards to pick your best candidates. Our guide to using scorecards to build hiring confidence walks through building one that reviewers actually agree on.
3. Focus on core competencies
A lot of adverse impact is designed in before a single candidate applies, through requirements that screen for background rather than capability. “Five years of sales experience” filters on who’s had access to five years of sales jobs. “Proven ability to build rapport with new clients and hit a quota” filters on the thing you’re actually hiring for.
Here's how to make this work:
- Job analysis: Identify the KSAs (knowledge, skills, and abilities) needed to excel in the role. You can spot these by thinking about how the job supports the overall business. If possible, talk to current employees in the role as well to get firsthand perspectives.
- Skills-based descriptions: Instead of listing years of experience as the primary requirement, focus on the skills and knowledge needed to perform the job. For example, instead of "5 years of experience in marketing automation," list the specific software proficiency and campaign management skills you need.
- Behavioral interviewing: Ask candidates situational questions that explain their past behaviors in similar situations. This gives them an opportunity to share any lessons learned or how they might act differently today based on new knowledge.
One example of this is SmartLynx Airlines. Using Willo, the international airline built a human-centric employer brand and focused on holistic candidate assessment to understand the whole candidate, not just their resume or application details. This helped them source and hire 400+ people from around the world.
4. Share best practices across recruitment stakeholders
Bias can creep in at any stage of the recruitment process—from sourcing candidates to making final decisions. To combat this, foster collaboration and knowledge sharing among everyone involved in hiring.
Here are some ways to achieve this:
- Regular training sessions: Conduct training sessions for recruiters, hiring managers, and interviewers on unconscious bias and best practices for inclusive hiring. There are plenty of high-impact training methods for fostering self-awareness, like immersive workshops, VR experiences, and personal bias testing.
- Create SOPs: Develop SOPs that systematize inclusive hiring. You can create these for tasks like writing job descriptions, sourcing candidates, conducting interviews, and making offers.
- Support open communication: Encourage open communication between different stakeholders in the recruitment process. Recruiters can share their strategies for sourcing diverse candidates, while interviewers can provide feedback on the effectiveness of the interview process.
5. Create a clear and equitable promotion policy
Just like hiring, promotions are also susceptible to adverse impact. To prevent this, establish a clear and well-defined promotion policy based on objective criteria:
- Performance metrics: Develop a transparent system for evaluating employee performance that aligns with the company's goals and the specific requirements of each position. This could include metrics like sales targets achieved, project completion rates, or leadership skills demonstrated.
- Succession planning: Implement a structured succession planning process that identifies high-potential employees and provides them with opportunities for development through mentorship, training programs, or challenging assignments.
- Diversity in promotion committees: Promote diversity within promotion committees. By including individuals from different backgrounds, you can ensure a wider range of perspectives are considered during the evaluation process.
6. Keep the final call with a person
AI can make this easier, and it can also make it worse, so the line matters. Used well, AI summarizes responses, transcribes them, and flags where a candidate did or didn’t meet a criterion, which lets a reviewer work through a large pool consistently instead of getting fatigued and sloppy by candidate forty. Used badly, it makes the shortlisting decision itself — and candidates can tell.
Applicants react markedly worse to being evaluated by an algorithm than by a recruiter, reporting lower fairness and more discomfort, even when the underlying assessment is the same. That instinct is also good bias policy: a summarize-and-inform tool keeps a human accountable for the decision, where an auto-reject tool quietly hands the protected-group math to a model nobody can interrogate.
In our 2026 hiring report, not a single hiring professional surveyed thought automation should make the final hiring decision. Willo Insights is built to that line — it evaluates each response against the criteria you define for the role, shows the evidence behind every match, and leaves the shortlisting call with your team. The AI prepares the evidence. You make the call.
Consequences of Not Paying Attention to Adverse Impact
Legal ramifications
Adverse impact can violate anti-discrimination laws in many countries. For example, multiple countries, including the United States, Canada, the UK, and the EU, have laws prohibiting discrimination in hiring and employment practices. If your selection practices are found to be disproportionately impacting protected groups, you could face legal action.
Ethical concerns
Everyone wants to feel like they have an equal opportunity to succeed, regardless of background. When you ignore adverse impact, you intentionally create a system that disadvantages certain groups of people.
This raises huge ethical questions about fairness and equality, particularly if any part of your corporate mission is about acting with ethics or integrity. Discrimination has no place in the workplace, and as a company, it is your responsibility to ensure that your hiring processes are fair and unbiased.
Reputational damage
Today's talent pool is more diverse than ever before. People want to work for companies that value diversity, equity, and inclusion (DEI). In fact, studies show that 80% of employees consider DEI a factor when choosing a job.
If your company is perceived as having biased practices, it can damage your employer brand. And as we found in our 2024 Hiring Trends Report, more than 83% of recruiters see a strong employer brand as either “Very…” or “Extremely important”.
Decreased employee morale
When employees from certain groups notice they're being passed over for promotions or opportunities unfairly, it can have a significant impact on morale. They may feel discouraged, disengaged, and less likely to contribute their full potential. This can lead to a decrease in productivity, creativity, and, in the worst cases, employee turnover.
Missed opportunities
Diverse teams bring a wider range of perspectives and experiences to the table, which can lead to better problem-solving, decision-making, and up to 19% better innovation. By ignoring adverse impact, you're potentially missing out on this large pool of qualified talent and the benefits they bring.
Want to start building a fairer workforce today? Here’s where to start
Pick one recent role and run the four-fifths rule on it. If a group clears the 80% threshold comfortably, good — log it and move on. If it doesn’t, you’ve found something worth a closer statistical look and, more usefully, worth tracing back to the decision that produced it. That’s almost always where the fix lives — in whether every candidate answered the same questions, scored against the same rubric, judged on the skills the job needs, by a person who owns the call. Structure the decision, and the numbers tend to follow.
Remember—adverse impact can be subtle, but its consequences (missed opportunities, reinforced biases, and social stereotypes) are often devastating. By adopting structured employment interviews, interview scorecards, and the other strategies outlined here, you can significantly reduce this unintentional bias in your selection process.
As you can see, Willo is a valuable tool in your journey toward a more inclusive workplace. Our platform allows you to easily create structured interviews and introduce transparency in your screening process with Scorecards.
