New England Biz Law Update
A boom in Internet-based screening tests is helping employers cull through thousands of resumes. But they could face legal challenges if they’re not careful about how these pre-employment tests are designed and used.
The job testing industry is currently thriving, raking in an estimated $400 million a year. As many as five million Americans a year take psychological tests – often over the Internet – for jobs in public safety, airlines, retail, banking and other industries.
“Personality tests have become something of the latest fad,” said Joseph Sellers, who heads Cohen Milstein Hausfeld & Toll’s employment and civil rights practice group in Washington.
Employers see the tests as “a very fast and cheap way to separate out applicants into the group they want to take a closer look at and the people they don’t want,” said Michael Kirkpatrick, an attorney with Public Citizen Litigation Group in Washington. “Rather than have to interview people, they can have somebody take a test on the Internet, and that’s a first hurdle.”
But employment law experts warn that the tests may be screening out too high a proportion of minorities and other groups.
“On the surface, the purpose is laudable, but it has led to an increased use of certain kinds of tests where there’s potential room for abuse,” Sellers said.
The key legal issue is whether an employment test creates a disparate impact on a particular group of applicants, such as minorities.
The Equal Employment Opportunity Commission applies an “80 percent rule” – a pass rate of less than 80 percent for minority applicants suggests that the test has a disparate impact. For example, if 100 percent of whites pass and only 75 percent of African-Americans pass, that would suggest a problem.
“Without anybody really intending to discriminate, you can accidentally end up with tests that have a disparate impact that just can’t be justified,” Kirkpatrick explained.
If the test has a disproportionate effect on one group over another, he said, “the question becomes: Can the employer justify the use of that test by showing that it’s job-related and consistent with business necessity?”
Another potential legal issue is that a psychological test may qualify as a “medical test” in violation of the American with Disabilities Act, which prohibits pre-employment medical tests.
And privacy issues are also concern, according to Michael Harris, head of litigation support services at EasiConsult, an international employment testing firm based in St. Louis.
“Some questions might violate state law regarding invasion of privacy about religion and sexual behavior,” he said.
Measuring Personality
For employers, the benefits of Internet-based pre-employment tests are obvious.
“Companies have to somehow whittle down the pool of applicants. You can administer them and score them easily,” Harris said.
An employer who gets 100 resumes, for example, may use a personality test to eliminate 80 applicants.
Popular tests include:
Experts say this type has the greatest likelihood of predicting success on the job and minimizing any adverse impact on minorities and other protected groups. But they’re time-consuming and more expensive to administer.
That’s why the cognitive ability and personality tests are more popular. But those tests carry risks for employers unless they are carefully designed and administered.
For example, cognitive ability tests “almost always create a disparate impact on minorities,” according to Harris.
Personality tests – which have become extremely popular – may also be risky.
For one thing, Sellers said, “They are viewed as not terribly predictive of success on the job. They’re less likely to have an adverse impact than cognitive tests, but they’re not very good at distinguishing between candidates who are really good and those who are not really good.”
That means that a plaintiffs’ lawyer could make a good case for challenging a personality test if it’s not clearly related to job performance.
The biggest legal issue with personality tests, however, is that a test that could be used to interpret someone’s mental health may violate the Americans with Disabilities Act.
In June 2005, the 7th Circuit held that the Minnesota Multi-Phasic Personality Inventory (MMPI) qualified as a “medical examination” under the ADA. Therefore, it was illegal to use it as an employment test that could be used to screen out applicants with disabilities. (Karraker v. Rent-A-Center, 411 F.3d 831.)
In that case, two brothers who worked for an Illinois furniture rental chain filed a class-action suit, alleging that the employer’s policy of requiring employees seeking management positions to take psychological tests violated the ADA.
The employer claimed that it used the MMPI only to measure personality traits – not mental disorders.
But the court held that whether or not the employer used the MMPI to weed out applicants with certain disorders, “its use of the MMPI likely had the effect of excluding employees with disorders from promotions.”
In Minneapolis attorney Joseph Schmitt’s view, the problem is that employers are misusing the MMPI.
“The MMPI was not designed for this,” said Schmitt, who practices with Halleland Lewis Nilan Sipkins & Johnson. “It was originally designed as a diagnostic device to attempt to identify people who have mental problems.”
Other Problems
Some discrimination claims that have arisen centered on how a test’s cutoff score was determined.
In a case involving an aerobic capacity test for Pennsylvania transit police applicants, a 2002 3rd Circuit decision held that when a test is used for entry into a job, the cutoff score has to be set to correspond to the minimal level necessary to do the job, and no higher. (Lanning v. SEPTA, 308 F.3d 286.)
