Avoiding Legal Issues in Pre-employment Testing

Pre-hire testing is an effective risk management tool that has been proven to significantly reduce turnover and improve productivity. A recent survey by the American Management Association reported that 69 percent of firms used job skills testing, 43 percent used basic skills testing (math, reading, writing), and 33 percent used some form of psychological testing in 2000.

Despite the widespread use of pre-employment testing, anxiety continues to surround the use of these tests due to legal issues, which are largely complicated and difficult to understand.

This article reviews the three most pressing legal issues involved in pre-employment testing - adverse impact, the right to privacy and negligent hiring.

I. Title VII and Adverse Impact:

Under Title VII of the Civil Rights Act of 1964, it is "unlawful for an employer to refuse to hire any individual, or otherwise discriminate against any individual with respect to his . . . employment, because of race, color, religion, sex, or national origin."

With regards to pre-employment testing, Section 703(h) of the Act provides that "notwithstanding any other provision of this subchapter, it shall not be an unlawful practice for an employer . . . to give and to act upon the results of any professionally developed ability test provided that such test . . . is not designed, intended or used to discriminate because of race, color, religion, sex or national origin." Obviously, Title VII does not prohibit employers from the use of intelligence, skills or integrity tests in the workplace. However, the statute is brought into play when: (1) an employer uses tests to intentionally discriminate against protected groups or (2) the tests have an adverse impact on minorities and are not job-related for the position.

There has not been a single case that found an employer's use of personality testing in the workplace resulted in the adverse impact of protected groups. However, there could be such a finding if the tests were used to purposefully exclude minorities.

Recommendation: The safest practice is to administer the same pre-employment test to all applicants for a particular position, making reasonable accommodations for those who need it (e.g., translation for non-English speakers, larger computer terminal for visually impaired, etc.). This is the first step towards a fair and equitable selection process.

The concept of adverse impact was set in motion by the 1991 Civil Rights Act by the U.S. Supreme Court in Griggs v. Duke Power Company. In order to prove the existence of adverse impact, it must be shown that a specific employment practice has a significant adverse impact upon a protected group.

Most courts have relied on the 80 percent rule as indicated by the EEOC's Uniform Guidelines on Employee Selection Procedures. According to this rule, adverse impact is established if the selection rate for any minority group is less than 80 percent of the rate for the group with the highest selection rate.

Recommendation: An adverse impact study should be performed every time a test is brought in to a new site for personnel selection purposes. If adverse impact is detected, steps can be taken to eliminate it, thereby protecting both the applicants and the company.

It is important to note that there have been few adverse impact cases involving personality or integrity tests because such tests usually do not have an adverse impact on any minorities. No one has ever successfully proved a prima facie case against the use of integrity tests. On top of this, there are very few challenges, no more than 100, for the millions of tests that have been administered.

~II. Right to Privacy:

An issue of growing legal concern for employers using personality testing is privacy. The concept of a right to employment privacy evolved from the broader concept of the right to privacy. Some states such as California, have applied such privacy standards to private employers. The lower courts have recognized the constitutional right to privacy protects public employees. Thus, test questions administered to public employees must not be unreasonably intrusive (e.g., questions about sexual preferences, religious or political views) and must be job-related.

Recommendation: With regard to issues of privacy, the recommended route is to use a third party testing company. This allows applicants to take the assessment through an unbiased third party who keeps their actual responses confidential. Using this approach, companies have access to the overall test results, but do not have access to candidates' responses on individual test items. This eliminates the majority of privacy issues.

III. Negligent Hiring

While there are reasons for being cautious when using pre-employment testing, there are also legal trends that argue strongly for the most extensive use of such tests. With negligent hiring now recognized in most states, employers have been forced to account for crimes committed by employees, usually thefts, battery or assaults that victimize customers and/or employees. In these cases, liability depends on the employer negligently placing someone with negative tendencies into a position where it was foreseeable that the hired individual posed a threat to others.

Recommendation 1: Prior to making an offer, pre-employment testing should be used to ensure the applicant fits the culture and expectations of your company.

Recommendation 2: In addition, background screening (e.g., criminal history, driving history, social security number, etc.) is an excellent idea to protect yourself and your coworkers from a dangerous hire, as past history is an excellent indicator of future behavior.

Editor's Note - Dr. John Schinnerer is a certified entrepreneur and psychologist from U.C. Berkeley. He is President and CEO of InfiNET Assessment, which does web-based pre-employment testing to match jobs to people. He may be reached via email at John@InfinetAssessment.com.