Adverse Impact Calculator

What the four-fifths rule is and how this is calculated

The four-fifths rule comes from the Uniform Guidelines on Employee Selection Procedures, published at 29 CFR 1607.4. It says that a selection rate for any race, sex, or ethnic group which is less than four-fifths, or 80%, of the rate for the group with the highest rate will generally be regarded by the federal enforcement agencies as evidence of adverse impact. It applies to any procedure that selects some people over others: hiring, promotion, and selection for layoff included.

The method

The enforcement Q and A lays out four steps. Work out the selection rate for each group by dividing the number selected by the number considered. Find the group with the highest rate. Divide every other group’s rate by that highest rate. Any result below 80% is treated as a sign of adverse impact. This tool runs those four steps on the rows you enter and shows the math for each group so nothing is hidden.

A worked example

Suppose 72 people from one group were considered and 7 were selected, a rate of 9.7%. From a second group, 63 were considered and 3 were selected, a rate of 4.8%. The first group holds the highest rate, so the second group’s ratio is 4.8 divided by 9.7, which is about 49%. That is well below the 80% line, so the check flags the second group and the selection process needs a documented, job-related justification or a revised set of criteria.

What a flag means

A flag is where the work starts, not where it ends. The Q and A is explicit that the rule is a rule of thumb for drawing an initial inference, not a tolerance for any amount of discrimination and not a finding of illegality on its own. The presence of adverse impact does not require abandoning the procedure. It requires justifying it as job related and consistent with business necessity, and considering whether an alternative with less impact would serve the same purpose.

Small numbers and large numbers

The rule gets unstable on small groups, where one selection either way can swing the ratio across the line, and the Guidelines note that small-number differences may not constitute adverse impact when they are not statistically significant. The reverse also holds: where large numbers of selections are made, relatively small rate differences can constitute adverse impact if they are significant in statistical and practical terms. That is why practitioners pair the four-fifths screen with a statistical significance test on anything consequential.

Which number is selected in a layoff?

Count the people who received the favorable outcome. In a reduction that is the people you keep, so enter the number considered and the number retained for each group. Using the favorable outcome keeps the 80% line reading the same way it does for hiring and promotion.

Does a failed check mean the process is illegal?

No. The federal Q and A on the Uniform Guidelines is explicit that the four-fifths rule is a rule of thumb for spotting adverse impact, not a finding of unlawful discrimination. A flag means you either justify the practice as job related and consistent with business necessity or you revisit the criteria before the decision is final.

Which groups should I compare?

The Uniform Guidelines frame the comparison around race, sex, and ethnic groups, and the enforcement Q and A says agencies generally analyze groups that make up at least 2% of the pool. In a reduction, many employers also run the same math on employees age 40 and over, since that population has its own federal protections.

Is this legal advice?

No. This is general information and a planning check built on the published federal guidelines. Selection decisions carry real legal exposure, so confirm your criteria, your analysis, and any flagged result with qualified counsel before you act.