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A company is reviewing its hiring data to check for potential adverse impact. Out of 200 applicants, 100 are men and 100 are women. The company hires 60 men and 36 women. According to the four-fifths (4/5) rule, does this show evidence of adverse impact?


AYes, because the female selection rate is less than 90% of the male rate
BNo, because the female selection rate is higher than 80% of the male rate
CNo, because both groups had equal numbers of applicants
DYes, because the female selection rate is less than 80% of the male rate

Verified Answer :

  • Calculate the male selection rate: \(SR_m = \frac{60}{100} = 0.60\).
  • Calculate the female selection rate: \(SR_w = \frac{36}{100} = 0.36\).
  • Determine the threshold: \(0.8 \times 0.60 = 0.48\).
  • Conclude: \(\boxed{\text{Yes, because the female selection rate is less than 80\% of the male rate}}\).

Explanation

  1. Calculate the selection rates

To determine whether the company's hiring practices show evidence of adverse impact, we first calculate the selection rates for both men and women. The selection rate is defined as the number of individuals hired divided by the total number of applicants in that group.

For men:

  • Number of applicants = \(100\)
  • Number hired = \(60\)
  • Selection Rate (\(SR_m\)) = \(\frac{60}{100} = 0.60\) (or \(60\%\))

For women:

  • Number of applicants = \(100\)
  • Number hired = \(36\)
  • Selection Rate (\(SR_w\)) = \(\frac{36}{100} = 0.36\) (or \(36\%\))
  1. Determine the threshold for adverse impact

The four-fifths rule states that adverse impact is suggested if the selection rate of the minority or protected group is less than \(80\%\) (or \(\frac{4}{5}\)) of the selection rate of the group with the highest selection rate.

Here, the highest selection rate is the male rate: \(SR_m = 0.60\).
The threshold for adverse impact is:
\[\text{Threshold} = 0.8 \times SR_m = 0.8 \times 0.60 = 0.48\]
This means the female selection rate must be at least \(0.48\) (or \(48\%\)) to avoid triggering the four-fifths rule for adverse impact.

  1. Compare and conclude

Now, we compare the female selection rate to the calculated threshold:

  • Female selection rate (\(SR_w\)) = \(0.36\)
  • Threshold = \(0.48\)

Since \(0.36 < 0.48\), the female selection rate is indeed less than \(80\%\) of the male selection rate. Therefore, the data shows evidence of potential adverse impact according to the four-fifths rule. Among the options provided, this corresponds to: "Yes, because the female selection rate is less than \(80\%\) of the male rate."

Examples

HR departments and legal teams use the four-fifths rule to monitor hiring practices. For example, if a software company hires 50 out of 100 male candidates and only 30 out of 100 female candidates, the selection rates are \(0.5\) and \(0.3\) respectively. Since \(0.3 < 0.8 \times 0.5 = 0.4\), this would alert the company to investigate if their hiring process is biased.

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