The four-fifths rule is a diagnostic arithmetic test, not a quota and not a verdict. You compute one number and compare it with 80 percent.
What section 4(D) says
A selection rate for any race, sex, or ethnic group that is less than four-fifths (80 percent) of the rate for the group with the highest rate will generally be regarded by the federal enforcement agencies as evidence of adverse impact.
Two things to hold onto. It is a ratio of rates, not a gap in percentage points. And the reference group is the one with the highest selection rate, whichever group that is, not the largest applicant pool, not the majority group, and not an average of all groups.
The computation
- Selection rate = selected / applicants, for each group.
- Impact ratio = the group's rate / the highest rate.
Worked example: Group A hires 60 of 200, a rate of 60/200 = 0.30, or 30 percent. Group B hires 24 of 100, a rate of 24/100 = 0.24, or 24 percent. The highest rate is 30 percent, so the impact ratio is 24/30 = 0.80, exactly 80 percent.
That is the boundary case, and it is the one people get wrong. The rule reads less than four-fifths. 80 percent is not less than 80 percent, so exactly 0.80 does not signal adverse impact. The same arithmetic appears in the 400/120 versus 250/60 skills test: 30 percent and 24 percent, ratio 0.80 again, not below four-fifths.
Three groups
With more than two groups, find the highest rate first. A is 50/100 = 50 percent, B is 30/80 = 37.5 percent, C is 18/60 = 30 percent. A is highest, so C's ratio is 30/50 = 60 percent, below four-fifths.
The traps
- Dividing hires by hires, or treating hire counts as percentages.
- Reporting the percentage-point difference: 30 and 20 give 67 percent, not 10.
- Dividing the higher rate by the lower and getting 150 percent.
Set the highest rate as the denominator, divide, compare with 0.80.