The four-fifths rule is the quickest test for whether a hiring, promotion or approval process treats one group worse than another. It takes two minutes to calculate, and it is the starting point for NYC Local Law 144 audits. It is also easy to misread.
Where it comes from
The rule comes from the federal Uniform Guidelines on Employee Selection Procedures, adopted in 1978 (29 CFR 1607.4(D)). It says that a selection rate for any race, sex or ethnic group that is less than four-fifths (80%) of the rate for the group with the highest rate will generally be regarded as evidence of adverse impact.
How to calculate it
- Selection rate for each group = people selected ÷ people who applied.
- Find the highest rate. That group is the reference.
- Impact ratio = each group's rate ÷ the highest rate.
- Compare with 0.80. Below 0.80 is a red flag worth investigating.
Illustrative numbers, not a real employer.
Women are selected at 21.0% and men at 30.0%. 21.0 ÷ 30.0 = 0.699, which is below 0.80, so under the rule of thumb this process shows evidence of adverse impact against women. You can check this, or your own numbers, with our free four-fifths rule calculator.
Three ways it misleads
- Small groups. With 20 applicants, one extra hire can move a ratio from 0.75 to 0.90. The Guidelines themselves say small numbers may make the rule unreliable. Look at statistical significance too, and read ratios for groups under about 30 people with care.
- Large groups. The opposite problem: with thousands of applicants, a ratio of 0.85 can be statistically significant. Passing the rule does not mean there is no disparity.
- The groups you didn't check. A process can pass for sex and for race separately and still fail for Black women or Hispanic men. Local Law 144 requires intersectional categories for exactly this reason. And if you never collected race at all, the rule cannot run, but bias can still be there through proxies (more on that in our article on proxy discrimination).
Is it still the law in 2026?
The four-fifths rule was always a rule of thumb, not a legal threshold, and federal agencies are stepping back from it. An April 2025 executive order directed agencies to deprioritize disparate impact enforcement. In July 2026, the Office of Personnel Management removed references to the Uniform Guidelines from federal hiring regulations, and the EEOC's regulatory agenda lists rescinding the interpretive portions of the Guidelines.
That does not make the numbers irrelevant:
- Disparate impact is written into Title VII by Congress (the Civil Rights Act of 1991), so private lawsuits can still rely on it.
- NYC Local Law 144 requires impact ratios every year for automated hiring tools, whatever federal agencies do.
- New Jersey's Division on Civil Rights adopted disparate impact rules, in effect since December 15, 2025, that explicitly name automated decision-making tools.
In short, regulators may be asking less often at the federal level, but plaintiffs, cities and states still ask, and the impact ratio is still the first number they look at.
Sources
- 29 CFR 1607.4: Information on impact (Uniform Guidelines)
- Nelson Mullins: Disparate impact executive order v. Title VII and the courts
- CWC: OPM removes Uniform Guidelines references from federal hiring regulations (Aug 2026)
- Ogletree: The EEOC's regulatory agenda, 10 signs of intent (Jul 2026)
- Morgan Lewis: New Jersey codifies existing disparate impact rules (Dec 2025)