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Two Types of Discrimination
Court cases have developed the following two types of discrimination.
Disparate treatment
The first, disparate treatment looks at treating groups or individuals differently on the basis of "protected groups." For example, not hiring a woman for a sales job on the basis that she is a woman.
Disparate impact
The second, disparate impact examines the effect of discrimination. Discrimination may be assumed if a protected group is not represented in a job category as much as might be expected. A common test for adverse impact is the four-fifths rule, which states that the selection rate for any protected group must be no less than four-fifths or eighty percent of the selection rate for the group with the highest selection rate. For example, we have a population of 10,000 people where 5,000 are “protected” and 5,000 are non-protected. Further assume that all 5,000 of the non-protected individuals are “selected” for some positive employment outcome (i.e., promotion, discretionary bonuses etc.), and that 4,000 of the 5,000 protected individuals are “selected”. The calculation using the 80% Rule is 80% and hence there is no concern for disparate impact.