Disparate Results in Adverse Impact Tests: The 4/5ths Rule and the Chi Square Test

Abstract

The Uniform Guidelines on Employee Selection Procedures suggests the “4/5ths rule” for testing the outcome of selection procedures for adverse impact. The appropriate statistical test is a Chi Square testing for a significant difference between the selection ratios of the minority and majority applicants. However, the 4/5ths rule and Chi Square test do not agree 10–40% of the time depending on sample size, making it difficult for personnel managers to monitor their organization's Equal Employment Opportunity compliance. The extent of disagreement between the two tests is described, and recommendations are given for how personnel managers should use the 4/5ths rule and the Chi Square test to determine whether a selection procedure has adverse impact.

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