Employment Discrimination and Statistics: The 4/5’s Rule

The Uniform Guidelines On Employee Selection Procedures: The Basis for the Four-Fifths (80%) Rule

In 1978, the Equal Employment Opportunity Commission, the Department of Labor, the Department of Justice, and the Civil Service Commission adopted a set of guidelines, entitled the Uniform Guidelines on Employee Selection Procedures. (I refer to them as the Guidelines for the remainder of this document). The focus of these Guidelines was on providing information on discrimination in the area of employment testing, but they cover all personnel decisions. Specifically, the focus of these Guidelines is on what constitutes a discriminatory test, as well as other decisions, based on “court decisions, the previously issued guidelines of the agencies, and the practical experience of the agencies, as well as the standards of the psychological profession.” The Guidelines focus on when a personnel process has adverse or disparate impact (as opposed to disparate treatment) and how an employer can defend a process that has been shown to have disparate impact.

So, When Does A Selection Process Have Disparate Impact?

The Guidelines describe the “four-fifths or eighty percent rule” and state that “A selection rate for any race, sex, or ethnic group which is less than four-fifths (or eighty 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, while a greater than four-fifths rate will generally not be regarded by Federal enforcement agencies as evidence of adverse impact.”

For example, imagine Large City uses an entry-level psychological test for police officer applicants. There were 100 women who applied to be police officers and 20 were hired (for a selection rate of 20%) and 500 men who applied and 250 were hired (for a selection rate of 50%). Now, 20% is .40 of 50%. Forty percent is less than four-fifths (eighty percent), so in this example, Large City’s police department has disparate impact against women in its selection test.

Does A Company Have To Show Intention To Discriminate To Be In Trouble Here?

No. Intention has nothing to do with disparate impact. This means that even an organization that is truly committed to diversity may nevertheless have discrimination problems.

So, If The Company Meets This Four-Fifths Rule, Is The Company Safe?

Not necessarily! The Guidelines state that: “Smaller differences in selection rate may nevertheless constitute adverse impact, where they are significant in both statistical and practical terms or where a user’s actions have discouraged applicants disproportionately on grounds of race, sex, or ethnic group.” Other statistics may be useful, too.

OK, So The Test Violates The Four-Fifths Rule – Now What? According to the Guidelines, “use of any selection procedure which has an adverse impact on the hiring, promotion, or other employment or membership opportunities of members of any race, sex, or ethnic group will be considered to be discriminatory and inconsistent with these guidelines, unless the procedure has been validated in accordance with these guidelines…”

Validation, What Does THAT Mean?

Validation is a topic for another time. You see, that can get complicated. You might wish to check out the most recent professional guidelines, which were just recently updated by the Society for Industrial and Organizational Psychology.

Won’t A Company Be Safe If It Just Didn’t Use Any Tests?Nice try, but the answer is “No.” Let’s see what the Guidelines say about this: “These guidelines apply to tests and other selection procedures which are used as a basis for any employment decision. Employment decisions include but are not limited to hiring, promotion, demotion, membership (for example, in a labor organization), referral, retention, and licensing and certification, to the extent that licensing and certification may be covered by Federal equal employment opportunity law.” These guidelines don’t just cover tests. They even cover minimum qualifications (MQs)!

What If The Company Just Doesn’t Keep Records Regarding Impact?Lack of documentation will probably work against the company. According to the Guidelines: “Each user should maintain and have available for inspection records or other information which will disclose the impact which its tests and other selection procedures have upon employment opportunities of persons by identifiable race, sex, or ethnic group … in order to determine compliance…”

In my next posting, I’ll provide some more implications of disparate impact for companies.

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