The Office of Federal Contract Compliance Programs (OFCCP) recently released newly established FAQs defining practical significance. This calculation relates to analyzing personnel activity and employment opportunity decisions during a specified time period. The agency has identified practical significance as an additional consideration in discrimination cases based on statistical evidence.
The agency notes that practical significance does not have a universally accepted measure however, what may be considered practically significant often depends on the employment areas at issue and facts specifically related to the case at the time of investigation. OFCCP may use practical significance measures to discount a disparity that might be indicated by statistical evidence. An example of is when a data set shows significance but with a zero shortfall. Or, the agency may use practical significance measures to pursue disparity that might otherwise be below generally accepted statistical thresholds. It is interesting to note that OFCCP states 2.0 standard deviations as the threshold for statistical significance.
The agency has indicated it will consider practical significance during compliance reviews. With these FAQs, the agency has taken the position that even though a disparity may not be significant, it does not necessarily indicate that discrimination did not occur. OFCCP is aware that the choice of an appropriate statistical test reduces the overall likelihood of a finding that lacks practical significance, and identifies several tests that can be used, including the impact ratio, odds ratio, and flip-flop rule, among others.
The 5 FAQs the agency has published are available to view here.