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4/5th's Rule

4/5th Rule: The four-fifths rule is the simplest and most common way of estimating adverse impact. The Uniform Guidelines indicate that the 4/5th's rule is the preferred method for determining adverse impact unless samples are very small or very large. The 4/5th's rule can be computed according to the four steps shown below:

1) Calculate the selection rate for each protected group that makes up more than 2% of the applicant pool. The selection rate is equal to the total number or applicants within the group that are hired divided by the total number of applicants within that group.
2) Observe which group has the highest selection rate. This is not always the white, male, or "majority" group.
3) Calculate the impact ratio by dividing the selection rate for each group by the selection rate of the group with the highest selection rate.
4) Determine if the selection rates are substantially different. If the impact ratio is less than .8, there is a 4/5th's rule violation.

Discuss the advantages and disadvantages of the rule.

Solution Preview

The 4/5th rule is a guideline established by four government agencies in 1987 to support Title VII of the Civil Rights Act 1964. EEOC, The Department of Labor, Department of Justice, and the Civil Service established the guidelines to prevent the intentional and unintentional discrimination of protected groups of job applicants. The rule ensures employers hire those in protected groups at a rate of at least 80% of those selected for employment in the non-protected group. All groups making up at least 2% of the applicant pool must be counted. If applicants from the protected group are not selected at 80% of those that apply, a case of adverse impact has occurred (Perry, 1991). The ...

Solution Summary

The solution discusses the four-fifth's rule. The protected groups are rated for an applicant pool.