Overview of the Risks Inherent to Employment Testing

Failing_gradeThe Supreme Court’s recent decision in Ricci v. DeStefano, has put a spotlight on the confirmation of Supreme Court Justice Nominee Sonia Sotomayor.  But, for most employers, the case has much broader implications, casting further doubt on the long-term viability of employment testing for hiring and promotion decisions. Employment testing is on the U.S. Equal Employment Opportunity Commission’s (EEOC’s) “least-favorites” list for a number of years but employers, recognizing the critical nature of these decisions, continue to utilize testing as a screening mechanism.  The Ricci decision presents a good opportunity to review the laws around employment testing. 

Disparate-Treatment Discrimination

Employers that are considering using an employment test must take special care to avoid violating the federal anti-discrimination laws, particularly Title VII of Civil Rights Act of 1964, which prohibits discrimination in employment on the basis of race, color, religion, sex, or national origin. Title VII prohibits two types of discrimination” disparate treatment and disparate impact.  Disparate treatment is what most people think of when they think of discrimination. This involves an intentional act of discrimination.  In the employment context, an employer takes an adverse employment action, such as deciding not to hire, against an individual because of the individual’s race, sex, religion, or other protected characteristic.  In other words, you treat someone differently (disparately), because of a protected characteristic.

Disparate-Impact Discrimination

Disparate impact, on the other hand, does not necessarily involve any animus towards an individual.  Instead, a policy or a practice (such as a test), is applied equally and without regard to membership in a protected class.  But the outcome or result disparately affects a protected class, thereby having a discriminatory impact.  Here’s an example. Let’s say an employer required all new applicants for any secretarial position to take a strength test as a prerequisite to being awarded an interview.  The test required applicants to bench press 110 pounds.  Most women applicants would not be able to pass the test and, as a result, only men would (for the most part) be awarded the positions. Because the test, which only tests physical strength, does not demonstrate whether the applicant is qualified for the position (i.e., can type X words per minute), the test would likely be found to constitute unlawful discrimination if challenged in court. If the test measured some trait or skill that was clearly related to the position being sought, the employer would have a much greater chance of success in defending the test.

The courts employ two methods to determine whether an employment test has a discriminatory impact.  First, if the selection rate for members of a protected group is statistically significantly different from the selection rate for the general pool, discriminatory impact is said to exist.  Second, there is said to be a discriminatory impact when the selection rate for members of a protected group is less than 80% of the selection rate for the group with the highest selection rate.

How to Demonstrate Job-Relatedness 

If either test is satisfied, the employer may still avoid liability by proving that the test measures job-related qualities.  To show job relatedness, the employer must prove three things: (1) that the test does correlate with successful job performance (criterion-related validation); (2) that the test actually measure the performance of job-related tasks or traits (content validation); and (3) that the trait being identified or measured by the test a trait that is a required to do the job well (construct validation).

In our strength-test example, the employer would fail under the criterion-related prong if the employees could compare the scores of applicants on the strength test did not correlate to scores on a typing test.  For example, if the fastest typists were not able to pass the strength test, then either typing skills or strength must not be a valid criterion since it seems that applicants couldn’t score well in both.  The employer would fail under the content-validation prong if the job did require physical strength, but only leg strength and the ability to bench press any weight was irrelevant.  The employer would fail under the construct prong if the employer could show that current secretaries, who were successfully working in the job, could not pass the strength test.  If they could do the job without passing the test, then the test, by definition, does not relate to job success and, therefore, is not job related.

Best Practices

Employment tests seem to be going out of style with employers but are still serve as a key factor in many employers’ hiring and promotion decisions.  If your organization either uses these tests currently or is considering their use, you can never be 100% sure that the test won’t lead to a lawsuit. But you can take the steps discussed below to reduce your risk.

First, as the most basic requirement, employers must issue all tests equally and without regard to race, religion, disability, or other protected characteristic.

Second, it is the employer’s responsibility to ensure that the test has been validated and meets all three requirements discussed above. An employer that uses tests should retain a professional testing company or other expert to conduct a validation study to determine whether the test will have a disparate impact in violation of the anti-discrimination laws. The validation study must be conducted in accordance with “generally accepted professional standards for evaluating standardized test.”  In other words, you must hire a professional–home-grown tests won’t stand up in court. And remember, a test vendor’s data on the test’s validity may be helpful to your analysis but you, as the employer, are ultimately responsible to ensure that the test truly is legitimate.

Third, the employer should maintain records and retest for at least two years as a way to self-audit any potentially discriminatory impact.  What to look for in these self-audits?  Employers must evaluate the test for fairness for each race, sex, and ethnic group that constitutes a “significant factor” in its workforce.

The Dangers of “Home-Grown” Employment Tests

The EEOC has the following to say about tests that are casually adopted without having survived the rigors of validity testing:

Employers should ensure that tests and selection procedures are not adopted casually by managers who know little about these processes. A test or selection procedure can be an effective management tool, but no test or selection procedure should be implemented without an understanding of its effectiveness and limitations for the organization, its appropriateness for a specific job, and whether it can be appropriately administered and scored.

(See EEOC Fact Sheet on Employment Testing).  This is where most employers get it wrong.  Wit
h the best intentions, an employer finds an “aptitude” test on the Internet and then “modifies” it for use during the screening process.  When clearly-qualified applicants fail the test or identify a flaw in a test question, the employer just changes the answer key or permanently strikes the “bad” question.  This is a disaster waiting to happen, isn’t it?  The test wasn’t validated in the first place (at least not that the employer could identify if questioned) and has since been changed, depending on the whims of an individual test giver or hiring manager.  That, in my opinion, is a guaranteed way to fail the EEOC’s test for discriminatory impact.