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Employment Issues: Law, Selection & Performance Appraisal

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  • 0:03 Employment Law
  • 1:14 Disparate Impact Analysis
  • 1:59 Employee Selection
  • 3:11 Employee Performance…
  • 4:24 Lesson Summary
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Lesson Transcript
Instructor: Beth Loy

Dr. Loy has a Ph.D. in Resource Economics; master's degrees in economics, human resources, and safety; and has taught masters and doctorate level courses in statistics, research methods, economics, and management.

In this lesson, we'll discuss how to apply statistical analysis to employment law issues, specifically employee selection and performance appraisal. We'll also learn how to apply the disparate impact analysis to evaluate a variety of employment issues.

Employment Law

Olivia is the head of human resources (HR) for Basra Financial, an investment firm. She oversees about 250 employees. As head of HR, she's responsible for making sure that Basra follows all applicable employment laws when it comes to employee selection and performance appraisals.

Employment law is a field of study focused on governing the relationship between employees and employers at all stages of employment. Olivia is responsible for laws that govern the interviewing, hiring, accommodating, reassigning, reprimanding, promoting, terminating, and even retiring of employees.

Olivia spends most of her time reviewing data related to employee selection and performance appraisals. As she cannot be involved in every hire and performance review, she uses statistical analysis to look for trends and discriminatory practices. Olivia wants to make sure that her company is not discriminating against protective classes such as those related to age, race, gender, religion, and ability. Let's look into the data Olivia reviews and discuss how she identifies any problem areas and determines if her company is violating one or more employment laws.

Disparate Impact Analysis

Olivia uses a method called disparate impact analysis, statistics that show if an employment practice is having an adverse impact on a protected class. She uses the same analysis the Equal Employment Opportunity Commission (EEOC) uses to show disparate impact. The Equal Employment Opportunity Commission (EEOC) is the federal agency that enforces most employment laws. The agency's rule of thumb states that if employees from a protected class are hired at a rate that's less than 80% of other groups, the employment practice is having a disparate impact on that class. These figures tell Olivia that she needs to look into why there is such a disparity and whether a violation of an employment law is at the root of the difference.

Employee Selection

Employee selection occurs when a company narrows down prospective employees to those it wants to hire. If a company discriminates based on a protected class, the data will show a disparate impact. So even if Basra isn't intending to discriminate, the company cannot use an employment practice that screens out individuals from a protected class.

For example, Basra has a cafeteria. The job description for cooks requires that they be able to hear, but is hearing essential to this position? Communicating is essential, but there are other ways employees can communicate in a busy, noisy kitchen. A disparate impact analysis will show an adverse impact on people with disabilities looking for cook positions.

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