1. What is Impact Ratio in Contract Terminations?

The Impact Ratio (IR) measures adverse impact in contract terminations by comparing the termination rates between protected and non-protected groups. It helps identify potential discrimination in employment decisions.

2. How Does the Calculator Work?

The calculator uses the Impact Ratio formula:

Where:

• Affected Group Rate — Termination rate of the protected group (%)
• Unaffected Group Rate — Termination rate of the non-protected group (%)

Interpretation: An IR below 0.8 (80%) may indicate adverse impact under the EEOC's Four-Fifths Rule.

3. Importance of Impact Ratio Calculation

Details: Calculating IR helps organizations assess potential discrimination risks, ensure compliance with equal opportunity laws, and make data-driven decisions about workforce reductions.

4. Using the Calculator

Tips: Enter termination rates as percentages for both groups. The affected group is typically the protected class (e.g., racial minority, women). The unaffected group is the comparison group.

5. Frequently Asked Questions (FAQ)

Q1: What is considered a problematic IR value?
A: Generally, an IR below 0.8 (80%) suggests potential adverse impact, though statistical significance should also be considered.

Q2: How should termination rates be calculated?
A: Termination rate = (Number terminated in group / Total in group before terminations) × 100

Q3: What if my IR is slightly above 0.8?
A: While 0.8 is a guideline, other factors like statistical significance and pattern of decisions should be considered.

Q4: Does this apply to all protected classes?
A: Yes, the same calculation can be used for race, gender, age (40+), disability status, and other protected characteristics.

Q5: What should I do if my calculation shows adverse impact?
A: Review termination decisions for legitimate, non-discriminatory reasons and consider consulting with legal/HR professionals.