Adverse Impact and the Four-Fifths Rule
80%
The Threshold
Four-Fifths = 80%
1978
Established
EEOC Uniform Guidelines
All
HR Processes
Hire promote train layoff
What Is Adverse Impact?
Adverse impact (also called disparate impact) occurs when a seemingly neutral employment practice has an unintentional disproportionate negative effect on a protected group. The critical threshold is 80% of the rate for the highest-scoring group.
Disparate Impact (Adverse Impact)
No intent required. A policy, test, or criterion that is facially neutral but produces a significantly different outcome for a protected group. Think of a strength test that screens out 60% of female applicants but only 10% of male applicants.
Disparate Treatment
Intentional discrimination. An employer deliberately treats someone differently because of their protected class. Direct evidence (statements, policies) or circumstantial evidence (McDonnell Douglas framework) can prove it.
The Four-Fifths Rule
The four-fifths (or 80%) rule comes from the 1978 EEOC Uniform Guidelines on Employee Selection Procedures. It provides a practical way to measure whether a selection process may be causing adverse impact.
The Formula
Selection Rate
Lower Group
Selection Rate
Higher Group
Result
Impact Ratio
If the result is below 0.80 (80%), adverse impact may exist
Worked Example
Scenario— A company uses an aptitude test for hiring. 48 out of 80 White applicants pass (60%). 12 out of 40 Hispanic applicants pass (30%).
30% ÷ 60% = 0.50 (50%)
The impact ratio is 0.50, which is well below the 0.80 threshold. This flags potential adverse impact against Hispanic applicants. The employer must now demonstrate that the test is job-related and consistent with business necessity, or find an alternative with less impact.
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Practice Adverse Impact QuestionsExam Traps
watch out for theseFailing the test does NOT mean breaking the law
The four-fifths rule is a screening device, not a legal standard. A selection rate below 80% triggers further analysis, but it does not automatically prove discrimination. Employers can still defend the practice through job-relatedness and business necessity.
Applies to ALL employment decisions, not just hiring
Promotions, layoffs, training selections, transfers, and terminations are all subject to adverse impact analysis. The exam will test whether you limit it to hiring alone.
Adverse impact and disparate treatment are NOT the same
Impact is about outcomes and patterns. Treatment is about intent. A perfectly neutral policy can still cause adverse impact. The exam loves to mix these up in answer choices.
Impact vs Treatment
Impact = the system is unfair. Treatment = I chose to be unfair.
The 4/5 Rule Is a Guideline
The 4/5 rule is a guideline, not law. It flags problems.
Imagine two groups of kids both selling cookies at a school bake sale. Group A sells 100 boxes. Group B sells 70 boxes.
Divide the lower group by the higher group. 70 divided by 100 = 0.70. That is 70%.
The fairness floor is 80%. Since 70% is below 80%, the school needs to look at whether the bake sale setup was unfair to Group B.
Falling below the floor does not mean anyone cheated. It means the school should investigate whether the rules gave one group an unfair advantage.
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