The Application of the Likelihood Ratio Test and the Cochran-Mantel-Haenszel Test to Discrimination Cases

Abstract

In practice, the ultimate outcome of many important discrimination cases, for example, the Wal-Mart, Nike and Goldman-Sachs equal pay cases, is determined at the stage when the plaintiffs request that the case be certified as a class action. The primary statistical issue at this time is whether the employment practice in question leads to a common pattern of outcomes disadvantaging most plaintiffs. However, there are no formal procedures or government guidelines for checking whether an employment practice results in a common pattern of disparity. This article proposes using the slightly modified likelihood ratio test and the one-sided Cochran-Mantel-Haenszel (CMH) test to examine data relevant to deciding whether this commonality requirement is satisfied. Data considered at the class certification stage from several actual cases are analyzed by the proposed procedures. The results often show that the employment practice at issue created a common pattern of disparity, however, based on the evidence presented to the courts, the class action requests were denied.

KEYWORDS:

• Cochran-Mantel-Haenszel test
• Class action
• Disparate impact
• Employment discrimination
• Likelihood ratio test
• Stratified data

Acknowledgments

It is a pleasure to thank the editor, the associate editor and the two anonymous referees for their thoughtful and helpful comments and suggestions.

Disclosure Statement

No potential conflict of interest was reported by the author(s).