Adverse Impact and the 4/5ths Rule
80%
The Threshold
Four-Fifths Rule floor
1978
Established
EEOC Uniform Guidelines
All
HR Decisions
Hire, promote, train, layoff
two bars · one fairness floor
The 4/5ths Bar Chart
Plot each group's selection rate as a bar. Draw the 80% fairness floor across them. Any group falling below the floor relative to the leader triggers adverse impact.
how to read this
- › The green bar is the higher-passing group. Its rate is the reference.
- › The dashed yellow lineis the 4/5ths floor — 80% of the higher group's rate.
- › Any other group whose bar falls below that line triggers adverse-impact analysis. The employer then must defend the practice as job-related and consistent with business necessity.
- › Below the floor is a screen, not a verdict. It opens the defense, not the case.
memorize the steps · reuse on the exam
The Calculation, Step by Step
Same numbers, three steps. The exam will reuse this exact flow with different inputs.
step 1
Selection rate per group
Higher: 100/200 = 50%
Lower: 30/100 = 30%
step 2
Ratio (lower ÷ higher)
30% ÷ 50% = 60%
step 3
Compare to 80%
60% < 80% → adverse impact
The four-fifths rule screens for adverse impact. Below 80% triggers a defense — not automatic liability.
Exam Traps
Failing 4/5ths is not automatic liability
It triggers a defense. The employer must show the practice is job-related and consistent with business necessity. The exam tests this nuance.
Adverse impact applies to ALL HR decisions
Not just hiring. Promotions, training selections, layoffs, compensation increases — all subject to disparate impact analysis.
Disparate Impact ≠ Disparate Treatment
Impact = facially neutral practice with unequal results. Treatment = intentional discrimination against an individual. Different evidence, different defenses.
The 4/5 rule is a guideline, not a statute
Statistical significance tests can also show adverse impact even when 4/5 is technically met. Courts use both.
Impact vs Treatment
Adverse impact = the system is unfair. Disparate treatment = I chose to be unfair. Wrong category, wrong answer.
4/5 is a screen
Below 80% triggers a defense, not automatic liability. The employer gets to justify business necessity.
The teacher says anyone who can carry this tray across the room without dropping cupcakes runs a booth. The rule applies equally.
10 of 20 taller kids pass (50%). Only 2 of 20 shorter kids pass (10%). The tray was not designed to be unfair, but the outcome is wildly unequal.
Lower group must pass at least 80% of the rate of the top group. 10% is only 20% of 50%. Way below 80. Adverse impact indicated.
If the tray is genuinely required for booth success, defense holds. If the test is arbitrary, the practice has to change.
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