What is Four-fifths rule?
Also called 80% rule
The four-fifths rule is the rule of thumb in the United States Uniform Guidelines on Employee Selection Procedures: if a group's selection rate is less than four-fifths of the highest group's rate, federal enforcement agencies will generally regard the procedure as having adverse impact. It is a trigger for scrutiny, not a legal verdict.
What the Guidelines actually say
The rule appears at 29 CFR §1607.4(D), and its wording is deliberately hedged: a rate less than four-fifths 'will generally be regarded' as evidence of adverse impact, while a greater rate 'will generally not be regarded' as such. The same paragraph goes on to say that smaller differences may still be treated as adverse impact where they are statistically significant and practically significant, and that greater differences may not be where the numbers are small.
So the rule is a screening heuristic written into a guidance document, and it has never been the standard a court applies. Courts have relied on statistical significance tests for decades, and the four-fifths ratio is best understood as the number that decides whether anyone looks harder.
Using it without over-reading it
Compute it per stage, not over the whole funnel, and report the group sizes with it. Pair it with a two-proportion test so that a ratio computed on twelve people is not read as though it were computed on twelve hundred.
And treat the rule as jurisdictionally specific. It is a United States federal enforcement convention; it is widely borrowed elsewhere as a monitoring heuristic, but it carries no legal status outside that context and should not be presented as though it does.
Not the same as statistical significance
The four-fifths rule asks whether the gap is large. A significance test asks whether the gap is more than sampling noise. Small samples routinely fail the first and pass the second; large samples routinely do the opposite.
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