
When discussing the 4/5ths rule, it is important to note that the law distinguishes between disparate treatment and disparate impact of protected classes.  Disparate treatment is intentional discrimination of a protected class and requires no more than a finding that protected classes were intentionally treated differently because of their membership in a protected class. Examples of such behavior would include a rule against the hiring of bus drivers over the age of sixty or  a policy that prohibited women from being hired to do heavy machining.
Disparate impact is different in that the rules for hiring practice do not specifically or intentionally treat members of a protected class differently, but rather, seemingly innocuous employment rules turn out to have a greater adverse impact on the members of a protected class regardless of the intent of the rule.  Examples of disparate impact would include a hiring rule that an employee must be able to lift 150 pounds above their head, because women are less capable of this action than men, or employee must have college degree, because whites tend to achieve higher levels of education than minorities.
Disparate impact claims do not require proof of discriminatory intent, but rather, the plaintiff must show that the apparently neutral employment practice creates an adverse impact on a protected class.  This is an appropriate point to assert that the protected class may shift from one group to another depending on the impact on the group. If men are being hired at a much higher rate than women, women are the protected class, if, however, women are hired at a much higher rate than men, men then become the group adversely impacted by the hiring policy.
Up until this point in the conversation, adverse impact has only been discussed in qualitative terms, “much higher” etc.  The 4/5ths rule gives a definite and quantitative measure to determine the disparate rejection rates and can be used to show whether or not the rejections rates of protected classes are indeed disparate.  The 4/5ths rule proceeds as follows
The selection rates for each protected group that makes up more than 2% of the applicant pool.  This is determined as # hires / # applicants
The group with the highest selection rate is singled out for comparison to other protected classes.  This is not always the majority class.
The disparate rejection rate is calculated by dividing the highest selection rate determined above by 4/5ths.  
Compare the hiring rates of the other protected classes to this rate. If the hiring rates are below the disparate rejection rate, then the rule shows adverse impact.
An example of the 4/5ths rule is provided below.

In the above example, let us assume that the only demographical information we know about the applicants is their gender and race.  Therefore, we must examine the possibility of adverse impact on all groups within each of these two classes.  First we calculate the hiring rate for men and women at 47% and 55% respectively. 