Unintended Consequences of EEO Enforcement Policies: Being Big is Worse than Being Bad

In enforcing the Civil Rights Acts of 1964 and 1991, it is often critical to determine whether a challenged procedure has systematic adverse impact. The use of statistical significance tests to make this determination has the perverse consequence that the size of an organization or an applicant pool has more impact on determining adverse impact than the extent to which procedures actually discriminate. That is, it is worse to be big than to be bad. We use Monte Carlo studies to illustrate this unforeseen consequence of current enforcement policies and note that a broader definition of adverse impact is clearly warranted.