Hiring decisions can have major consequences, not just for organizations but also for fairness and compliance with employment law. One important guideline used to evaluate whether hiring practices are fair is the four-fifths rule, also known as the 80% rule. But what does this rule mean, where does it come from, and why does it matter for employers today?
Four-Fifths Rule
A guideline established by the Uniform Guidelines on Employee Selection Procedures (UGESP) in 1978. It provides a way to measure whether a hiring practice or test results in adverse impact against a protected group under Title VII of the Civil Rights Act of 1964.
The rule states that the selection rate for any demographic group (based on race, sex, or ethnicity) should be at least 80% of the selection rate for the group with the highest rate. If the rate falls below 80%, it may indicate adverse impact and trigger further investigation.
Defining the Four-Fifths Rule
The four-fifths rule is a guideline established by the Uniform Guidelines on Employee Selection Procedures (UGESP) in 1978. It provides a way to measure whether a hiring practice or test results in adverse impact against a protected group under Title VII of the Civil Rights Act of 1964.
In simple terms, the rule states that the selection rate for any demographic group (based on race, sex, or ethnicity) should be at least 80% of the selection rate for the group with the highest rate. If the rate falls below 80%, it may indicate adverse impact and trigger further investigation.
For example, if 60% of male applicants pass a skills test, at least 48% of female applicants (80% of 60) should also pass for the test to meet the four-fifths rule.
Why the Rule Matters
The four-fifths rule is not an absolute legal requirement but a practical standard used by the Equal Employment Opportunity Commission (EEOC) and the courts to evaluate hiring practices. It acts as an initial red flag rather than a final judgment. Falling below the 80% threshold does not automatically mean discrimination is occurring, but it does mean that the employer should review the process closely and ensure the selection procedure is job-related and consistent with business necessity.
Employers who ignore this guideline risk facing discrimination claims, lawsuits, and reputational harm. On the flip side, using the four-fifths rule proactively helps organizations identify and fix potential biases in their hiring systems before they escalate into legal problems.
How It Works in Practice
To apply the four-fifths rule, employers calculate the selection rate for each group. This is the number of applicants hired or promoted from that group divided by the total number of applicants from that group. The group with the highest rate is considered the “reference group.” Then, the selection rates for other groups are compared to this reference rate to see if they meet the 80% threshold.
For example, imagine a company is hiring from a pool of applicants:
- Out of 100 white applicants, 50 are hired, giving a 50% selection rate.
- Out of 50 Black applicants, 15 are hired, giving a 30% selection rate.
In this case, the ratio is 30% ÷ 50% = 60%, which is below 80%. This suggests potential adverse impact against Black applicants and may require further review.
Benefits of Using the Four-Fifths Rule
The primary benefit of applying the four-fifths rule is that it provides a clear, quantitative standard for identifying disparities. It helps employers maintain compliance with EEOC guidelines and foster more equitable hiring practices. It also ensures that tests and assessments are validated and truly measure the skills necessary for the job rather than inadvertently screening out qualified candidates from protected groups.
By monitoring selection rates, employers can create more inclusive hiring processes and promote workforce diversity. In turn, this often leads to stronger teams and improved organizational performance.
Limitations and Criticisms
While the four-fifths rule is useful, it is not without limitations. Critics point out that the rule is somewhat simplistic and doesn’t account for statistical significance. In small sample sizes, even minor differences in hiring numbers can appear as adverse impact when they may not be meaningful. On the other hand, large-scale patterns of discrimination could exist even if selection rates hover just above 80%.
Courts and regulators therefore use the rule as a guideline rather than a strict legal threshold. Employers must still validate their hiring tools, showing that they are job-related and consistent with business necessity, even if they pass the four-fifths test.
Best Practices for Employers
To make the most of the four-fifths rule, employers should use it as part of a larger compliance and fairness strategy. That includes validating pre-employment tests, conducting regular adverse impact analyses, documenting hiring decisions, and exploring alternative selection methods when disparities appear. Partnering with legal counsel or HR compliance experts can also help ensure hiring practices are defensible and equitable.
Final Thoughts
The four-fifths rule offers employers a practical tool to evaluate fairness in hiring. While not a rigid legal standard, it is widely recognized as a first check for potential adverse impact and is frequently cited in EEOC enforcement and court cases. By understanding and applying this rule, organizations can reduce legal risks, strengthen diversity, and ensure that hiring decisions are based on merit rather than bias. In a competitive labor market, fairness isn’t just a compliance requirement—it’s a business advantage.
