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.

HR Answers This article was furnished by HRnext.com, Your Source for for practical answers to HR questions.

Giving References: HR Pros Say Less is Best
Less is best when it comes to providing references on former employees, according to the latest HRnext poll.

Seventy-one percent of those who responded to last week's poll say their company provides "safe and skimpy" references on former employees. Fifteen percent said they won't provide references at all. Only 14 percent said their company provides "honest and forthright" references.

The topic generated some discussion in HRnext's Community area as well.

"If we cannot believe each other and talk in plain terms, then there is something wrong with our system," said Lou Gavin, a retired director of HR and current personnel and management auditor from Mandeville, Louisiana. "The truth is always the best defense. It seems to me that we should be telling people at management seminars, that if the information is true, let the potential employer know about it."

But most who discussed the topic were more concerned about the legal ramifications of telling the truth.

"Our attorney has requested that we only give dates of service, title and salary," Marilyn Polan, director of Human Resources for Allied Realty of Huntington, West Virginia, posted in the HRnext discussion area. "As much as I want to be honest with others doing reference checking, I am leaning towards 'less is best.'"

Several other participants agreed, citing directives from lawyers and concerns over potential lawsuits.

"…Legally, a "neutral" reference, as stated (dates of employ, position held, and job title) is probably your best way to go," posted Maurean Winger, the director of operations for a background screening company.

Others offered creative ways to handle reference information. "I will 'negotiate' a neutral reference on an involuntary termination as part of a severance package in return for a signed general release agreement," Deanne Ferguson, chief operating officer of Plastic Products of Minneapolis, Minn., posted. "That neutral reference will only include dates of employment, position held, and job title."

"With all of the sensitivity and paranoia surrounding this issue, I don't think you can expect to get much more than employment dates and position these days," said one anonymous poster. "We try to combat this with pre-employment screening and a mandatory 90 day temp-to-hire trial period."

Trends for 2002 in HR
As we embark on a new year, the editors at HRnext put their heads together and came up with a list of trends they think will be the focus of HR departments in 2002:

HR More Important, Strategic. In the midst of an ongoing recession, companies will need more than ever to pay close attention to the bottom line. As a large portion of any company's expenses is related to personnel, HR departments will be asked to play a more strategic and prominent role in company decisions. HR managers will be asked to closely align HR to company objectives.

Staff reductions and other cost containment. As companies layoff employees, leave positions unfilled and make other cost reductions to try and stay afloat during the economic recession, it will be up to the HR department to implement the reductions, assist terminated employees and keep the retained workforce motivated and content. HR mangers will be asked to contribute ideas on how the company can continue to minimize expenses.

Containing the cost of health care benefits. The exploding cost of health insurance threatens some companies that are already floundering because of the sluggish economy. Yet, it's important for companies to continue to offer attractive benefits packages, including good health care coverage, if they are to retain and attract the talent they need to survive and ultimately succeed. HR managers will be asked to find the balance between helping the company minimize expenses and offer good benefits. In addition, HR managers will be looking toward benefits that can save the company money, such as Section 125 plans.

Workplace security and safety. Everyone is taking this issue very seriously since Sept. 11, as company leaders realize they will need more than a simple evacuation plan in place. HR managers will be developing thorough plans and policies designed to keep employees safe and the workplace secure. Workplace violence will also continue to be a concern.

Leave issues. FMLA continues to be a concern to HR managers, as companies try to make do with fewer employees. Also, military leave issues are top-of-mind in many companies, as the war on terrorism continues and more employees are called to serve.

Acquisitions and mergers. Many companies are merging as the sluggish economy lingers, and affected HR managers will need to figure out how to merge payroll, handbooks, policies and cultures. It's important to keep key talent during mergers, so affected HR managers will play a strategic role in the process.

The aging workforce. As the 'Boomers' get gray, more and more of the workforce will continue to go the same way. Furthermore, better health care is extending lives and many feel up to working well into their sixties and seventies. Still others have to keep working because they failed to save enough for retirement, or saw retirement assets shrink in the stock market. HR managers will need to be wary of issues related to recruiting, hiring and employing older workers without discriminating against them, or appearing to.

Technology. HR Departments will make better use of the Internet and intranets, to store, organize and disseminate information to employees as well as implement self-service technology to reduce HR costs. The Web will continue to become an important tool for HR Departments, but one that can be difficult to implement.

Terminations: Just the Facts, Ma'am... and Other Tips
Susan K. Krell of Jackson Lewis told a recent gathering of Human Resource professionals that the key to any discipline and termination action is to appear to be a fair employer.

She pointed out that said personnel actions demand prudent practice as more and more states pass complex and difficult HR laws. Here are some tips she offered HR pros:

1.Avoid all value judgments when writing up disciplinary action or termination letters; stick strictly to the facts. Embellishing the notes or communications with additional thoughts or opinions can't help
and just might hurt a lot.

2.Always have HR present at termination-decision meetings. This way you get a witness to corroborate what is said, as well as help
inexperienced managers avoid saying/doing something that is best left unsaid.

3.Always give about-to-be-fired employee at least a brief hearing. You don't want to be surprised later on, that for example, the
employee had a FMLA or ADA problem you didn't know about.

4.And, document times 3. It is always disappointing to go back and find out that you did things the right way, but you have no records
to prove it.

Lastly, The key is to look to a jury like a fair employer. If you follow that maxim in practice and on paper, you probably won't get hurt too badly if the discipline or termination action goes awry.

Cutting Workers Comp Costs - Not Just a Dream
Contributing Editor, Best Practices in HR

When you hear someone say you can reduce your workers’ compensation (WC) costs, do you just smile and nod, then continue on with the business of the day? You are not alone.

"A lot of people think that workers’ compensation goes up no matter what you do, but that does not have to be the case," says Jerry W. Nolen, HR director for the City of Pelham, Alabama. "I’m not saying it’s going to be simple, but just doing some small things can make a real difference. And the best part is that your main concern will continue to be caring about your employees and making them feel as though you care about them."

Nolen uses incentives, education, and visuals to modify workers’ behaviors in an effort to control WC costs, and as he says, "It has worked unbelievably well."

Results tell the story

When Nolen came to work for Pelham in 1995, the city had 31 WC claims, all involving lost work time and costing the company $188,326. (Numbers are from the City of Pelham’s third-party administrator, which administers all the municipalities in the state of Alabama.) "Now," cautions Nolen, "the way we classify what is lost time is as follows: If a person is injured today, I am going to pay for the rest of the day because they are hurt. It’s considered lost time only if they miss their next shift."

After Nolen put in place his plan for reducing WC costs, the numbers started dropping dramatically. In 1996 the city had 30 WC claims, but only two of them involved lost time, and they totaled only $56,576. In 1998, the last year Pelham’s third-party administrator for WC claims had available, the City of Pelham had only five WC claims, one involving lost time, and the total cost to the city was a mere $2,274. During the period from 1995 through 1998, Pelham reduced its number of claims by 56 percent and its claim costs by 89 percent. That’s some reduction!

The three cornerstones to Nolen’s program are incentives, education, and visuals.


Offering employees incentives not only helps with safety and WC, notes Nolen, but it also helps with productivity and morale. Employees who have been with the city for 90 days and have been accident-free receive an individual award each quarter they make the goal.

"Each quarter we have a different reward, but all of them have the city logo and the year’s theme on it. This year the theme is ‘Safety 2000,’" says Nolen. "The main thing is to be sure it is quality merchandise that they will be proud to have or wear."

The city also offers yearly incentives to teams in the city. "I have 10 teams with about 30 people on each team, and whichever team has the most safety points at the end of the year wins," Nolen explains. "Prizes include something nice like a quality windbreaker with the city logo on it."


One way that teams can rack up safety points is by having their members attend the many safety talks that are given twice a quarter. Speakers include doctors, nutritionists, and chiropractors. The teams earn points if they have 70 percent or more of their team members in attendance.

Another way to get points has proven to be a real safety benefit for the entire city. Employees are encouraged to share safety suggestions. If the suggestion is accepted, they get two points.

Even if you don’t have a full program like Nolen’s, this is one aspect you still may want to incorporate anyway. "One of the first safety suggestions I received in 1995 was that we might want to store gasoline and dynamite in separate buildings," chuckles Nolen. "We didn’t even know we had dynamite; it was left over from a long time ago. But there it was, not only in the same building with gasoline, but on the same shelf, stacked on top of one another."


Nolen has big poster-size visuals that show exactly what prizes are being offered for each quarter. He places these in every department on the bulletin board. "This way, every day they come to work, they can see exactly what they are going to win. That is a very good incentive."

Helpful Hint

Have a well-written safety manual for your employees. In it, specifically list all the rules and procedures for each department. Also, explain exactly what the consequences are for not following safety rules and regulations. Include people from every department when developing your manual.

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