Definition
The four-fifths rule is a federal guideline for spotting adverse impact in hiring and promotion. A selection rate for any race, sex, or ethnic group that is less than four-fifths, or 80 percent, of the rate for the group with the highest rate is generally regarded as evidence of adverse impact.
Also known as: 80 percent rule, 80% rule, 4/5ths rule
How it works
First, calculate each group's selection rate: the number hired or promoted divided by the number of applicants in that group. Second, identify the highest rate. Third, divide each other group's rate by the highest rate. A ratio under 0.80 is generally regarded by federal enforcement agencies as evidence of adverse impact.
The rule is a screening tool, not a legal definition of discrimination. Under 29 CFR 1607.4, smaller differences can still show adverse impact where they are significant in statistical and practical terms, and larger differences may not when they involve small numbers and are not statistically significant.
Employers often run the calculation at each stage of a selection process and pair it with a significance test, since small applicant pools can swing the ratio sharply.
Example
If 50 of 100 male applicants are hired (50 percent) and 30 of 100 female applicants are hired (30 percent), the female-to-male ratio is 0.60. That is below 0.80, so the company reviews the process.
How it differs from similar terms
Four-Fifths Rule vs Adverse Impact. The four-fifths rule is a quick numeric test, while adverse impact is the broader concept, which can also be shown when smaller differences are significant in statistical and practical terms.
Related terms and guides
Frequently asked questions
What is the four-fifths rule threshold?
The threshold is 80 percent. Under 29 CFR 1607.4, a selection rate for a group that is less than four-fifths of the highest group's rate is generally regarded by federal agencies as evidence of adverse impact. Rates above that level will generally not be regarded as such evidence.
Is failing the four-fifths rule proof of discrimination?
No. It is a practical screening standard, not a legal definition of discrimination. The regulation notes that larger differences may not constitute adverse impact when they involve small numbers and are not statistically significant, so a flagged result should lead to review rather than a conclusion.
Why can small samples distort the rule?
With few applicants, one additional hire can move a selection rate dramatically. The regulation recognizes that larger differences may not be adverse impact when they involve small numbers and are not statistically significant, so analysts typically add a statistical test to the simple ratio.