The four-fifths rule, explained for small employers
The four-fifths rule is a simple test for whether a hiring step may be screening out a group unfairly. Here is how it works.
If you use any screening step in hiring, from a written test to an AI tool, a natural question is whether it treats all groups fairly. U.S. regulators have long used a simple rule of thumb to start answering that question: the four-fifths rule, from the federal Uniform Guidelines on Employee Selection Procedures adopted in 1978.
How it works
Look at the selection rate for each group at a hiring step: the share of applicants in that group who move forward. Then compare each group's rate with the rate of the group that did best.
If a group's rate is less than four-fifths, or 80 percent, of the highest group's rate, that is a signal of possible adverse impact. For example, if 50 percent of one group moves forward and 30 percent of another does, the ratio is 0.6, below 0.8.
What it does and does not mean
A low ratio is not proof of discrimination. Small numbers can swing the result, and there may be job-related reasons for a difference. But it is a sign to look closely at that step and ask whether it measures something the job really needs.
Where the data comes from
Group information should come only from voluntary self-identification that applicants choose to provide, kept separate from hiring decisions.
Why it matters now
As more hiring tools use automation, several states and cities have added rules about testing those tools for bias. Running the four-fifths check regularly is a sensible habit for any employer, whatever tools they use.
See it for yourself on JAI Bot.
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