EEOC, Systemic Investigations, and Assessments

The Equal Employment Opportunity Commission (EEOC) issued a review of its systemic program titled "Advancing Opportunity" in July 2016. The review marks the 10th anniversary of EEOC's 2006 Systemic Task Force Report. 

According to a press release accompanying release of the review:

"EEOC has transformed its systemic program in the past decade by investing in staff, training, and technology to build systemic expertise in every EEOC district," reflected EEOC Chair Jenny R. Yang. These investments have produced a 250 percent increase in systemic investigations in the past five years. 

Highlighting EEOC's significant achievements in resolving systemic cases, the review reports a 94% success rate in systemic lawsuits. In addition, EEOC tripled the amount of monetary relief recovered for victims in the past five fiscal years from 2011 through 2015, compared to the monetary relief recovered in the first five years after the Systemic Task Force Report of 2006.  EEOC also tripled the rate of successful voluntary conciliations of systemic investigations from 21% in fiscal year 2007 to 64% in fiscal year 2015.  

EEOC's Successes in Systemic Litigation

 Regarding pre-employment assessments, the press release states:

EEOC's systemic investigations have also led to changes in hiring assessment screens that discriminated based on race, sex and disability. In a public conciliation with Target Corporation, EEOC found that four hiring assessments formerly used by the retailer were not job-related and consistent with business necessity as required by Title VII and the ADA. Target agreed to pay $2.8 million to resolve a Commissioner's charge of discrimination alleging the assessments affected thousands of applicants and agreed to ensure that future hiring screens were validated to prevent discrimination against future applicants.

In "EEOC Burnishes Systemic Successes and Intentions," Jackson Lewis, a management side labor and employment law firm, writes:

The EEOC believes that employers too often ignore its pronouncements. Therefore, the EEOC considers the best way to obtain compliance is to leverage its resources by making an example of certain employers through systemic enforcement and lawsuits. 

The EEOC defines systemic discrimination as pattern or practice, policy, or class cases where the discrimination has a broad impact on an industry, profession, company, or geographic location. 

According to the Jackson Lewis article, "The [EEOC review] provides clues to the agency’s intentions in aspirational statements and disclosures about the EEOC’s investments and nationwide teams." These include:

Tests. Like the EEOC’s challenges to background checks, the EEOC’s concern with tests and assessments is that these selection criteria have an unlawful disparate impact. The [EEOC review] lists only one recent success challenging an employer’s use of a test as a selection device. However, it makes several references to the EEOC’s interest in scrutinizing tests and assessments.

While the EEOC review only lists the public conciliation with Target Corporation noted above, as noted in a September 2014 cover story in the Wall Street Journal, there are at least two ongoing systemic investigations relating to the use of pre-employment assessments and claims under the Americans with Disabilities Act that the assessments unlawfully screen out persons with mental disabilities and that the assessments are illegal pre-employment medical examinations.

The EEOC review states:

Moving forward, EEOC will focus on three key areas in order to expand the agency's impact and better serve the public: 1) executing national strategies to address persistent and emerging systemic issues; 2) advancing solutions that promote lasting opportunity in the workplace; and 3) strengthening the agency's technology and infrastructure.

Persistent and emerging systemic issues include those listed as national priorities in the EEOC's Strategic Enforcement Plan (SEP). First on the list of national priorities in the SEP  is:

Eliminating Barriers in Recruitment and Hiring. The EEOC will target class-based intentional recruitment and hiring discrimination and facially neutral recruitment and hiring practices that adversely impact particular groups. Racial, ethnic, and religious groups, older workers, women, and people with disabilities continue to confront discriminatory policies and practices at the recruitment and hiring stages. These include exclusionary policies and practices, the channeling/steering of individuals into specific jobs due to their status in a particular group, restrictive application processes, and the use of screening tools (e.g., pre-employment tests, background checks, date-of-birth inquiries). Because of the EEOC's access to data, documents and potential evidence of discrimination in recruitment and hiring, the EEOC is better situated to address these issues than individuals or private attorneys, who have difficulties obtaining such information.

(Emphasis added) 

A Fool With A Tool Is Still A Fool

In the June 22, 2015 cover story for Time magazine, "Questions to Answer in the Age of Optimized Hiring," author Eliza Gray asks, “Are we truly comfortable with turning hiring–potentially one of the most life-changing experiences that a person can go through–over to the algorithms?” The answer should be no.

When you have algorithms weighing hundreds of factors over a huge data set, you can't really know why they come to a particular decision or whether it really makes sense. As Geoff Nunberg, who teaches at the School of Information at the University of California Berkeley stated in an NPR interview, “big data is no more exact a notion than big hair.”

Decisions made or affected by correlation are inherently flawed. Correlation does not equal causation, as demonstrated by Tyler Vigen on his website Spurious Correlations. For example:

• There is a greater than 99% correlation (0.992558) between the divorce rate in Maine and the per capita consumption of butter in the U.S. over the years 2000-2009;
• There is a greater than 78% correlation (0.78915) between the number of worldwide non-commercial space launches and the number of sociology doctorates awarded in the U.S. over the years 1997-2009; and,
• There is a greater than 66% correlation (0.666004) between the number of films Nicolas Cage appeared in and the number people who drowned by falling into a swimming pool over the years 1999-2009.

And what of the correlation between personality and job performance? In a 2007 article titled, “Reconsidering the Use of Personality Tests in Employment Contexts,” Dr. Neil Schmitt, the University Distinguished Professor at Michigan State University, wrote:

 [A 1965 research paper found that] the average validity of personality tests was 0.09. Twenty-five years later, Barrick and Mount (1991) published a paper in which the best validity they could get for the Big Five [personality model] was 0.13. They looked at the same research. Why are we now suddenly looking at personality as a valid predictor of job performance when the validities still haven’t changed and are still close to zero?

If personality assessments are designed to find those employees with the best fit for the company culture, shouldn't the rising use of those assessments by employers over the past 10-15 years have resulted in a concomitant rise in employee engagement?

Gallup has taken an employee engagement poll annually since 2000. Gallup defines engaged employees as those who are involved in, enthusiastic about and committed to their work and workplace. According to the 2014 Gallup poll, 51% of employees in the U.S. were "not engaged" in their jobs and 17.5% were "actively disengaged." These percentages have changed little over the fifteen years Gallup has been polling.

Gallup’s research shows that employee engagement is strongly connected to business outcomes essential to an organization’s financial success, including productivity, profitability, and customer satisfaction. Yet, the purported benefits of personality assessments have failed to move the needle on employee engagement, meaning companies have not received the promised productivity and profitability "bumps" from using personality assessments.

Laszlo Bock

There are significant risks associated with the use of personality assessments in hiring algorithms, both to the employer and to the job applicant. As Google’s Laszlo Bock state in the Time article, “if [an employer] makes a bad assessment based on an algorithm or a test, that has a major impact on a person’s life–a job they don’t get or a promotion they don’t get.”

For the employer, the risks are at least two-fold. First, people who are “different” will be screened out, denying the employer the benefits that come from having a widely diverse group of employees. As Bock states in the article:

“I imagine someone who has Asperger’s or autism, they will test differently on these things. We want people like that at the company because we want people of all kinds, but they’ll get screened out by this kind of thing.”

The second risk for employers are the liabilities they face under laws like the Americans with Disabilities Act for using personality tests that screen out persons with disabilities, whether it be Asperger’s, autism, bipolar disorder, or other mental health challenges.  The Equal Employment Opportunity Commission (EEOC) currently has two systemic investigations ongoing against employers that used personality tests in their pre-employment screening processes.

The 2014 White House report, “Big Data: Seizing Opportunities, Preserving Values," found that, "while big data can be used for great social good, it can also be used in ways that perpetrate social harms or render outcomes that have inequitable impacts, even when discrimination is not intended." An accompanying fact sheet warns:

As more decisions about our commercial and personal lives are determined by algorithms and automated processes, we must pay careful attention that big data does not systematically disadvantage certain groups, whether inadvertently or intentionally. We must prevent new modes of discrimination that some uses of big data may enable, particularly with regard to longstanding civil rights protections in housing, employment, and credit.

Just as neighborhoods can serve as a proxy for racial or ethnic identity, there are new worries that big data technologies (personality assessments and algorithmic decisionmaking) could be used to “digitally redline” unwanted groups, either as customers, employees, tenants, or recipients of credit.  That is why we should not be comfortable with turning hiring over to the algorithms.

Knack Testing Illegal Under ADA?

Wasabi Waiter looks a lot like hundreds of other simple online games. Players acting as sushi servers track the moods of their customers, deliver them dishes that correspond to those emotions, and clear plates while tending to incoming patrons. Unlike most games, though, Wasabi Waiter purportedly analyzes every millisecond of player behavior, measuring conscientiousness, emotion recognition, and other attributes that academic studies show correlate with job performance. The game, designed by startup Knack.it, then scores each player’s likelihood of becoming an outstanding employee.

Knack's assessments are based on games developed by the company that may be "played" on computers and mobile devices. Interesting, but how do persons with disabilities play these games? How would a blind person play these game? How would a persons with limb paralysis play these games? How would a person with diminished mental capacity play these games? How well would a person who may not be computer literate, an older person for example, play these games? What advantage, if any, does a gaming environment provide for one class of persons (young male online gamer ) versus another (mature female non-gamer)?

Screening Out Applicants

Tests that screen out or tend to screen out an individual with a disability or a class of individuals with disabilities are illegal under the Americans with Disabilities Act (ADA) unless the tests are job-related and consistent with business necessity.

Knack testing relies on gamification. Applicants "play" Wasabi Waiter, Balloon Brigade, and other video games to generate the data used by Knack to identify promising applicants. As noted above, however, the reliance on video games screens out persons with disabilities, whether physical disabilities like blindness and limb paralysis or mental disabilities like diminished mental capacity.

Phrased differently, how would physicist Stephen Hawking, clearly an innovator and high performer, fare in taking Knack's Balloon Brigade? Hawking has a motor neurone disease related to amyotrophic lateral sclerosis, a condition that has progressed over the years. He is almost entirely paralysed and communicates through a speech generating device.

From a practical standpoint, legal claims that an individual with a disability has been screened out do not require a statistical showing of disparate impact, or other comparative evidence showing that a group of disabled persons are adversely affected. The plain language of the law – “screen out or tend to screen out” and “an individual with a disability or a class of individuals with disabilities” – confirm that a claim may be supported by evidence that the challenged practice screens out an individual on the basis of their disability.  “In the ADA context, a plaintiff may satisfy the second prong of his prima facie case [impact upon persons with protected characteristic] by demonstrating an adverse impact on himself rather than on an entire group.” Gonzalez v. City of New Braunfels.

Illegal Medical Examination

The ADA prohibits employers, whether directly or via third parties like Knack, from administering pre-employment medical examinations. Guidance by the Equal Employment Opportunity Commission defines medical examination under the ADA by reference to seven factors, any one of which may be sufficient to determine that a test is a medical examination.

Physiological Responses

One of those factors is whether the test measures an applicant's physiological responses to performing a task. EEOC guidance on this issue states:

[I]f an employer measures an applicant's physiological or biological responses to performance, the test would be medical.

According to Knack, its test:

leverages cutting-edge behavioral and cognitive neuroscience, data science, and computer science to build games which produce thousands of data points describing how a player perceives, responds, plans, reacts, thinks, problem-solves, adapts, learns, persists, and performs in a multitude of situations.

Types of physiological responses include a reaction or response - a bodily process occurring due to the effect of some antecedent stimulus or agent. As noted in the prior paragraph, Knack tests create data points that track how an applicant perceives, responds, reacts, adapts, learns and persists. The Knack test, therefore, is an illegal medical examination under the ADA.

Five Factor Model of Personality

Justin Fox, executive editor of the Harvard Business Review Group, took two of the Knack assessments and received information in the following report:

As can be seen by the report, among the factors measured by Knack are conscientiousness, openness and stability. These are elements found in the Five Factor Model of Personality, a model that is currently being challenged in at least seven charges filed with the EEOC. Please see ADA, FFM and DSM.

The ADA prohibits pre-employment medical exams but allows employers to “make pre-employment inquiries into the ability of an applicant to perform job-related functions.” The Knack gaming measurements do not seek job-related information and are not consistent with business necessity. The measurements, designed to reveal information about individuals’ openness, conscientiousness, stability (also referred to as neuroticism), and other factors do not seek information about the ability of an applicant to perform the day-to-day functions of a job.

Knowledge of Disability Not Required

Neither the medical examination claim nor the "screen out" claim under the ADA require that an employer have knowledge that an applicant has a disability, a consistent holding from a number of jurisdictions, including the 7th, 9th, 10th, and 11th Federal Circuit Courts of Appeal.

ADA guidance states, in relevant part:

A covered entity shall not require a medical examination and shall not make inquiries of an employee as to whether such employee is an individual with a disability or as to the nature and severity of the disability, unless such examination or inquiry is shown to be job-related and consistent with business necessity.

According to guidance issued by the EEOC, "This statutory language makes clear that the ADA’s restrictions on inquiries and examinations apply to all employees, not just those with disabilities.”

The Next Asbestos? The Next FLSA?

Asbestos Litigation

A 2005 RAND report states that asbestos litigation arose as a result of millions of individuals’ exposure to asbestos and as a result of many asbestos product manufacturers’ failure to protect workers against exposure and failure to warn their workers to take adequate precautions against exposure. The history of the litigation has been shaped by the rise of a sophisticated and well-capitalized plaintiff bar, heightened media attention to litigation, and the information technology revolution.

According to the RAND report:

• At least 8,400 entities have been named as asbestos defendants through 2002.
• Defendants are distributed across most U.S. industries.
• Total spending on asbestos litigation through 2002 was about $70 billion, broken down as set out in the diagram below.

FLSA Litigation

The Fair Labor Standards Act (FLSA) is the federal law of broadest application governing minimum wage, overtime pay, and youth employment. Employees who are covered by the FLSA are entitled to be paid at least the Federal minimum wage as well as time and one-half their regular rates of pay for all hours worked over 40 in a workweek, unless an exemption applies.

Although FLSA litigation can involve a variety of claims, two of the most common are misclassification claims—i.e., allegations that an employer has misclassified an employee, or a group of employees, as exempt from the FLSA’s overtime requirements—and “off-the-clock” claims—i.e., allegations that an employee, or group of employees, has not been paid for all of the time they worked for the employers.

These and other claims under the FLSA can be brought individually or on behalf of all “similarly situated” employees and former employees. As a result, FLSA cases can involve a large number of employees and present significant financial exposure for employers. For instance, in 2008 Walmart agreed to pay as much as $640 million to settle 63 federal and state class actions claiming the company cheated hourly workers and forced them to work through breaks.

The multitude of wage and hour claims and lawsuits that workers have filed under the FLSA, and its state law counterparts, have made wage and hour law the nation’s fastest growing type of litigation. All industries (including retail, financial services, hospitality, construction, technology, and communications) have been susceptible to these lawsuits.

As shown in the graph to the left, the number of wage and hour lawsuits increased significantly over the past reporting year to 8,126, up another 4.7% over the prior 12-month period. 

This is the seventh straight year of increases in federal court wage and hour lawsuits and ups the continuing explosion in these cases over the past decade to 237% and since 2000 to 438%. 

Although anecdotal, a partner at a major labor and employment defense law firm believes that those numbers would be substantially greater if wage and hour lawsuits filed in state courts under state pay practices, tip laws, meal and rest break requirements, independent contractor rules, and the like, were added.

Employment Testing Litigation

Employment testing litigation will have many parallels with asbestos and FLSA litigation, but on an even larger scale.

There are potentially tens of millions of plaintiffs

• Any person who takes an assessment, if the assessment is determined to be a medical examination will be a plaintiff. Appellate courts have held consistently that the prohibition on medical examinations extends to all persons, including persons who are not disabled (see, e.g., decisions from the Second, Sixth, Eighth, Tenth and Eleventh Circuits).
• Any class of disabled persons (i.e., those with mental illness) where the assessment tends to screen out those persons from employment consideration. Unlike disparate impact claims under other employment discrimination laws the ADA  does not require statistical evidence if an expert can confirm that the test would screen out persons with disabilities or categories of disabilities.
• Federal and state agencies seeking to recover billions of dollars spent on SSDI/SSI disability awards, Medicare/Medicaid and other costs expended on persons who were illegally and invidiously discriminated against as a consequence of the use of employment assessments.

There are potentially hundreds of thousands of defendants

• Employers utilizing testing will face claims by (A) applicants and employees for both the illegal use of a pre-employment medical examination and the failure to treat information obtained from such medical examination as confidential medical information, (B) federal and state agencies seeking recovery of costs incurred (disability awards, Medicare/Medicaid, etc.) as a consequence of the illegal testing, (C) claims by insurers denying coverage and (D) claims by testing companies denying liability/rejecting indemnification.
• Testing companies will face claims by (A) applicants whose information was not treated as confidential medical information (a separate cause of action that does not require exhausting of remedies with the EEOC), (B) employers seeking indemnification from the testing companies for claims made against the employers by applicants, government agencies and others, and (C) claims by insurers denying coverage. 
• Insurance companies who underwrite policies for employers and testing companies will face claims from those they insure as well as individuals and government agencies making claims against those employers and testing companies.

Costs to employers, testing companies and their insurers will be in the tens (if not hundreds) of billions of dollars, including:

• Defense transaction costs, including the costs of outside counsel, internal management and employee time, public relations, lobbying, etc.
• Gross compensation, including awards to applicants and payment of costs and fees (i.e., counsel, expert witnesses, e-discovery).
• Reputational damage costs, including lost/reduced sales and brand damage.
• Business restructuring and/or “disinfectant” costs – The employers and testing companies retention and use of confidential medical information in violation of the ADA safeguards has resulted in the applications and solutions that illegally use this data. The data derived from the hundreds of millions of assessments over the past years has created a virus that has "infected" the employer and testing company solutions that integrate this data. 

The (Non)Predictive Ability of the Gallup TeacherInsight Assessment

Gallup states that the TeacherInsight (TI) assessments have "been thoroughly researched and tested to be sure they identify potentially superior teachers." While it is to be expected that the company marketing the TI assessment would make such a statement, is there any independent support for the predictive ability of the TI assessment?

Establishing the predictive validity of an assessment usually requires that applicants who "pass" the assessment perform satisfactorily in practice, and those who do not pass do not perform satisfactorily in practice. The challenge with assessing the predictive validity of the TI assessment, however, is that teacher applicants who do not meet the cutoff score may not be hired. Consequently, support for the predictive validity of the TI assessment is determined by carefully documenting the evidence from teachers who “pass,” through correlational and regression analyses that compare performance on the target measure, TI scores, with one or more other measures.

Doctoral dissertations by Robert Jacob Koerner and Michael T. Novotny are two of the few independent, published research studies to examine the predictive validity of the TeacherInsight (TI) assessment:  that teachers who score higher on it will be more successful teachers.

Novotny Study


The Novotny study involved 527 teachers hired into a North Texas school district for the 2006-2007 school year. The study analyzed the relationships between the TI assessment scores and the eight Professional Development Appraisal System (PDAS) domain scores for those teachers. PDAS is the instrument used by the State of Texas for appraising its teachers and identifying areas that would benefit from staff development.

The Novotny study concluded that:

The TeacherInsight scores produced a statistically significant correlation with only one of the eight PDAS domain scores. However, even that correlation (r = 0.14) was weak. ... The findings do not support the ability of the TeacherInsight to identify more effective teachers, based on Professional Development Appraisal System scores. 

Koerner Study

The Koerner study examined the relationship between the TI assessment and student achievement as measured by the Texas Growth Instrument (TGI), which is an estimate of a student’s academic growth based on the Texas Assessment of Knowledge and Skills (TASK) scores for two consecutive years.More specifically, the study focused on the predictive validity of the TI assessment, that is, how well teacher TI scores predict student achievement gains, as measured by the TGI in reading, English language arts, and mathematics at the primary and secondary school levels. Participants in the study were 132 teachers from one Texas school district who taught reading, English language arts, or mathematics in Grades 3–11 during the 2005–2006 school year and had taken the online TI assessment.

According to Koerner:

The findings [of his study] provide little support to the validity of TeacherInsight in terms of its ability to predict student achievement scores and its usefulness as a tool for the selection of teachers by school systems. 

Wasting Resources, Eliminating Good Teachers

Both the Koerner and Novotny studies found statistically significant, but very weak, relationships with a small number of variables related to teacher success. Those very low correlations suggest a weak link at best between the TI assessment and student achievement and teacher effectiveness.

As Novotny states in the introduction to his study:

It is critical that schools and districts identify highly effective, highly qualified teachers to raise student achievement. School districts have limited resources such as time, money, and manpower to achieve this task. If standardized interview tools such as the TI are effective at identifying better teachers, the time and money spent on them are worthwhile. However, if these tools are not effective, then the time and money spent could be better utilized elsewhere. Furthermore, if the TI does not effectively identify better teachers it could be preventing good candidates from being hired or from being accepted into alternative certification programs.

Not only are there concerns that the TI assessment may waste resources and screen out good candidates, as set out in Systemic Risks for School Systems Employing TeacherInsight, the use of the TI assessment may also violate the non-discrimination provisions of labor and employment laws like Title VII and the ADA that are enforced by the U.S. Equal Employment Opportunity Commission.

As Dr. Melanie Schneider writes in TeacherInsight and the Selection and Hiring of Bilingual Speakers of English:

Should teachers, teacher educators, and professional teacher organizations passively accept the increasingly pivotal role of online assessment tools in the hiring process, or should they press for more research and a balanced selection process that includes multiples sources of information,including human interaction?

Zappos: The Future of Hiring and Hiring Discrimination?

Zappos has launched a new careers site and removed all job postings. Instead of applying for jobs, persons interested in working at Zappos will need to enroll in a social network run by the company, called Zappos Insiders. The social network will allow them to network with current employees by digital Q&As, contests and other means in hopes that Zappos will tap them when jobs come open.

"Zappos Insiders will have unique access to content, Google Hangouts, and discussions with recruiters and hiring teams. Since the call-to-action is to become an Insider versus applying for a specific opening, we will capture more people with a variety of skill sets that we can pipeline for current or future openings," said Michael Bailen, Zappos’ head of talent acquisition.

The idea is that recruiters will monitor the interactions, and alert promising applicants as job positions become available. "Our recruiters are focusing on proactive sourcing…so that we know EXACTLY who we want to interview once a position becomes available," Stacy Donovan Zapar, Zappos' Social Recruiting and Employer Branding Strategist, wrote in a posting explaining Zappos Insiders.

Ideally, the Zappos Insider strategy will result in an engaged, talented applicant pool from which the company can seamlessly fill positions. More importantly, at a company where cultural fit is 50 percent of the hiring equation, encouraging candidates and current employees to interact organically allows the company to gauge whether someone is a good fit before the hiring process officially begins, theoretically saving both time and money.

Zappos’ Bailen said he is surprised that Zappos appears to be the first to drop job listings. "We're hoping a lot of other companies jump on board," he said, but there are compelling reasons why Zappos may find itself alone.

Bias and Discrimination

In a comment to Donovan Zapar’s posting explaining the Zappos Insider initiative, Steve Kuzner asked:

Ultimately, the [Zappos Insider] policy makes the hiring process less transparent for job seekers, who will no longer even know there is an open position until they are deemed worthy to apply for it. While well-intentioned, such opacity provides a shield under which bias, conscious or not, can potentially flourish.

Donovan Zapar responded, in part, by acknowledging that there are laws prohibiting an employer from basing hiring decisions on the race, religion, national origin, gender, pregnancy, disability, genetic identity, or age of applicants (Protected Persons). That response is correct, as far as it goes, but it fails to address the broad scope of Title VII of the Civil Rights Act of 1964 (Title VII), its progeny (Age Discrimination in Employment Act (ADEA), Americans with Disabilities Act (ADA), Genetic Information Non-Discrimination Act (GINA), etc.), their implementing regulations, and court decisions over the past fifty years.

In addition to prohibiting discrimination in hiring, employment laws prohibit discrimination against Protected Persons in regard to recruiting, the work environment, or any other term, condition, or privilege of employment.  Not only do the laws prohibit intentional discrimination, they also prohibit neutral policies that disproportionately affect Protected Persons and that are not related to the job and the needs of the business.

Job requirements must be uniformly and consistently applied to all persons. Even if a job requirement is applied consistently, if it is not important for job performance or business needs, the requirement may be found unlawful if it excludes Protected Persons significantly more than others. Examples of potentially unlawful practices include: (1) soliciting applications only from sources in which all or most potential workers are of the same race or color; (2) requiring applicants to have a certain educational background that is not important for job performance or business needs; and, (3) testing applicants for knowledge, skills or abilities that are not important for job performance or business needs.

[Dis]Connection

Donovan Zapa wrote in her post:

In preparation for this day, we've built a brand new "Inside Zappos" social recruiting presence over the past couple of months on Twitter, Facebook, Instagram, LinkedIn and Pinterest …. We've used these social channels to share our company culture, our people, our campus, our events, the way we do business and also to get to know the people who might like to work for us someday.

Similarly, in response to the question, “How can I stand out from the pack and stay front-and-center in the Zappos Recruiters’ minds?” on the Zappos' Insider site, the company lists six ways to stand out, including: using Twitter, Facebook, Instagram, Pinterest and Google Hangouts; participating in TweetChats; following Zappos’ employees on various social media platforms; and, reaching out to Zappos’  “team ambassadors.” For the most part, all of the foregoing activities require broadband internet access and devices (tablets, smartphones, etc.) that run on those access networks.  A number of Protected Classes will be challenged by both the broadband access and social media participation requirements:

• As noted  by a PewResearch Internet Project Research report, African Americans have long been less likely than whites to have high speed broadband access at home, and that continues to be the case. Today, African Americans trail whites by seven percentage points when it comes to overall internet use (87% of whites and 80% of blacks are internet users), and by twelve percentage points when it comes to home broadband adoption (74% of whites and 62% of blacks have some sort of broadband connection at home).  
• The gap between whites and blacks when it comes to traditional measures of internet and broadband adoption is pronounced. Specifically, older African Americans, as well as those who have not attended college, are significantly less likely to go online or to have broadband service at home compared to whites with a similar demographic profile.
• According to the PewResearch Internet Project, even among those persons who have broadband access, the percentage of those using social media sites varies significantly by age:

Age	Social Media Participation
18-29	90%
30-49	78%
50-64	65%

Social medial participation is not solely a function of age. "Social media is transforming how we engage with customers, employees, jobseekers and other stakeholders," said Kathy Martinez, Assistant Secretary of Labor for Disability Employment Policy. "But when social media is inaccessible to people with disabilities, it excludes a sizeable segment of our population." Persons with disabilities (e.g., sight or hearing loss, paralysis), whether physical, mental, or developmental, face challenges accessing social media. Each of the social media platforms promoted by Zappos - Twitter, Facebook, Instagram, Pinterest, and Google Hangouts - have differing levels of support for those with disabilities (e.g., close captions or real live captions on image content that utilize sound/voice). 

Career transition and talent development consulting firm Lee Hecht Harrison asked hundreds of job seekers via an online poll, “How active are you on social networking sites?” Only forty-eight percent said they're active on a daily basis, with an additional nineteen percent saying they log on about two or three times per week. This leaves thirty-three percent who use social media sites one to three times a month, if at all. 

As Aristotle wrote, “There is nothing so unequal as the equal treatment of unequals.” It is for this reason that employment laws like Title VII prohibit facially neutral policies (e.g.,  enrolling in Zappos Insider, necessitating broadband internet access, and using social media platforms with varying degrees of accessibility ) that disproportionately affect Protected Persons and that are not related to the job and the needs of the business. Zappos' Insider may be a club that is "open" to everyone, but African Americans, persons over forty, and persons with disabilities, among others, will have a harder time being admitted and will be limited in their ability to use all the club has to offer.

Donovan Zapa, in her posting announcing Zappos' Insider, wrote:

[O]ur recruiters are focusing on proactive sourcing, driving people to join our Insider program, having two-way conversations, meeting people, networking, chatting with Insiders, answering questions, engaging on social media, employer branding and proactive pipelining so that we know EXACTLY who we want to interview once a position becomes available. It's old-school recruiting, made new and fresh again. 

It is likely that "old school recruiting" was part of the reason that laws like Title VII, ADEA, ADA and GINA were enacted. Persons making hiring decisions knew exactly who they wanted to interview and that did not include persons of color, women, older Americans, persons with disabilities, and persons of certain faiths. While likely not the intent, Zappos' Insider platform makes discrimination against "those persons" new and fresh (and painful and illegal) again.

Zappos Hiring: Culturally Fit? Legally Defensible?

Zappos has two separate sets of interviews. The hiring manager and his or her team will interview for the standard fit within the team, relevant experience, technical ability and so on. And then the HR department does a separate set of interviews purely for culture fit. Zappos has questions for each and every one of their ten core values. "They [applicants] need the relevant skill set and experience and so on," CEO Tony Hsieh says. "But far more important is, are they going to be good for the culture? Is this someone we would choose to have dinner or drinks with, even if they weren't working for Zappos?"

One of Zappos' core values is, "Create fun and a little weirdness." So, during an interview, a candidate gets asked, "On a scale of 1 to 10, how weird are you?"  "If you're a 1, you're probably a little bit too strait-laced for us. If you're a 10, you might be too psychotic for us," says Hsieh.  Another potential deal-breaker is saying you don’t socialize with co-workers outside the office. That could undermine another of Zappos’ core values: “Build a positive team and family spirit.”

Michael Hyter, senior partner at Korn Ferry has states, “The word ‘‘fit’’ in the absence of that support factor [fair consideration for jobs for people who happen to be different] can easily be misinterpreted as ‘‘being like me,’’ instead of what the position requires. Many organizations make the mistake of assuming that those tasked with selecting new hires are equipped to do so fairly because they are nice people or good workers. But failure to ensure the selection process is based on standard criteria with trained interviewers can result in unintentional bias in the spirit of looking for someone who’s a perceived ‘‘good fit.’’

Built-In Headwinds

As Natasha Tiku wrote in ValleyWag, "Taken at face value, "not a culture fit" sings: Nothing personal, you'd probably be happier somewhere else! But what prioritizing "fit" really allows a company to do is reject an applicant for not matching the pattern. For being an "other" in some way. For coming from a different background, looking different, acting different, having different interests, all of which should be considered an asset.

More than forty years ago, the Supreme Court ruled in Griggs v Duke Power Co. that "good intent or absence of discriminatory intent does not redeem employment procedures or testing mechanisms that operate as “built-in headwinds” for minority groups and are unrelated to measuring job capability." The Court found that some of Duke’s hiring requirements, like a high school education or a certain I.Q. level, were irrelevant to some jobs and had the effect of excluding qualified black workers. The Court held that the law "proscribes not only overt discrimination but also practices that are fair in form, but discriminatory in operation. The touchstone is business necessity. If an employment practice which operates to exclude Negroes cannot be shown to be related to job performance, the practice is prohibited."

As previously noted, failing to socialize with co-workers outside the office is a potential deal-breaker for Zappos. According to the company, that could undermine one of its core values: “Build a positive team and family spirit.”  This out-of-office socializing "deal-breaker" eliminates many persons from employment consideration, including single parents, children whose elderly parents need care, persons going to school part-time, and well-rounded persons who have interests outside the company - persons who engage in charitable activities, participate in civic functions or practice their faith.

A frequently-mentioned aspect of the Zappos culture involves the consumption of alcohol:

• According to Business Insider, "Zappos prides itself on a fun, quirky company culture where the CEO Tony Hsieh has been known to dole out shots of Grey Goose."
• A Zappos press release reads, "I had three vodka shots with Tony during my interview," says Rebecca Ratner, Zappos's head of human resources. "And I'm not atypical."
• As Ms. Ratner stated, "While we rack up some pretty big bills for happy hours and parties, we believe that every one of those dollars comes back to us threefold in employee engagement, which to us is really what success is all about."

The prominent role alcohol plays in Zappos' hiring for "cultural fit" would seem to present built-in headwinds for Mormons, Baptists, Muslims, recovering alcoholics, diabetics, and persons scarred - physically or mentally - by the acts and actions of alcoholics. As noted in Zappos: The Future of Hiring and Hiring Discrimination, many of the persons experiencing those headwinds are Protected Persons under federal and state employment discrimination laws.

During an interview at Zappos, a candidate gets asked, "On a scale of 1 to 10, how weird are you?" According to Zappos' CEO, "If you're a 10, you might be too psychotic for us." In a company that has "Create Fun and a Little Weirdness" as one of its core values, the word "weird" is associated with mental illness.

Historically, many employers asked applicants to provide information concerning their physical and/or mental condition. This information often was used to exclude and otherwise discriminate against individuals with disabilities -- particularly nonvisible disabilities, such as mental illness -- despite their ability to perform the job.The Americans with Disabilities Act (ADA) prohibits all disability-related inquiries pre-job offer.

The use of tests and other selection procedures, like Zappos' cultural fit interview, can violate the ADA if an employer intentionally uses them to discriminate based on disability or if they disproportionately exclude persons with disabilities, like persons with mental illness.

EEOC guidance notes that employers should ensure that employment tests and other selection procedures are properly validated for the positions and purposes for which they are used. The test or selection procedure must be job-related and its results appropriate for the employer’s purpose. If a selection procedure screens out a protected group (i.e., race, gender, age, disability), the employer should determine whether there is an equally effective alternative selection procedure that has less adverse impact and, if so, adopt the alternative procedure.

Core Values and Transparency

Zappos established ten core values to clearly define the Zappos Family culture, values that are to be reflected in everything they do and every interaction they have. When searching for potential employees, Zappos looks for people who both understand the need for these core values and are willing to embrace and embody them. The ten core values are explained by Zappos employees in the following video:

With the exception of the CEO, there appear to be no persons of color among the seven employees interviewed in the video. It may well be that the video is not a representative sampling of employee diversity at Zappos and, if so, the company, acting in accordance with the core value “Build Open and Honest Relationships With Communication,” could publish information on its workforce diversity along the lines of Google's recent disclosure. As Google's Senior Vice President of People Operations wrote:

We've always been reluctant to publish numbers about the diversity of our workforce at Google. We now realize we were wrong, and that it’s time to be candid about the issues. Put simply, Google is not where we want to be when it comes to diversity, and it’s hard to address these kinds of challenges if you’re not prepared to discuss them openly, and with the facts. 

The same spirit of openness that leads Zappos to supply information on sales to its suppliers through its extranet should lead it to provide its workforce diversity information to its employees, applicants, and the general public - Zappos' customers. 

EEOC's Next Step in Preserving Values

The recent White House report, “Big Data: Seizing Opportunities, Preserving Values," found that, "while big data can be used for great social good, it can also be used in ways that perpetrate social harms or render outcomes that have inequitable impacts, even when discrimination is not intended." The fact sheet accompanying the White House report warns:

As more decisions about our commercial and personal lives are determined by algorithms and automated processes, we must pay careful attention that big data does not systematically disadvantage certain groups, whether inadvertently or intentionally. We must prevent new modes of discrimination that some uses of big data may enable, particularly with regard to longstanding civil rights protections in housing, employment, and credit.

In order to address the potential for big data analytics to systematically disadvantage certain groups, the White House report contains the following policy recommendation:

The federal government’s lead civil rights and consumer protection agencies, including the Department of Justice, the Federal Trade Commission, the Consumer Financial Protection Bureau, and the Equal Employment Opportunity Commission, should expand their technical expertise to be able to identify practices and outcomes facilitated by big data analytics that have a discriminatory impact on protected classes, and develop a plan for investigating and resolving violations of law in such cases. In assessing the potential concerns to address, the agencies may consider the classes of data, contexts of collection, and segments of the population that warrant particular attention, including for example genomic information or information about people with disabilities. 

Examples of Discriminatory Big Data Practices and Outcomes

Examples of practices and outcomes facilitated by big data analytics that could have a discriminatory impact on protected classes include:

• Use of location-based data that discriminates against lower-income persons, who are disproportionately Black, Hispanic, women and people with disabilities. Please see  From What Distance is Discrimination Acceptable?

• Use of pre-employment personality tests that discriminate against people with mental disabilities. Please see What Are The Issues, ADA, FFM and DSM, and Employment Assessments Are Designed to Reveal an Impairment.

• Mental illness is no respecter of age, gender, geography, income, occupation, military status, race, religion or sexual orientation.  Please see Tests Discriminate Against Returning Veterans, Tests Discriminate Against New and Expectant Mothers and Employment Tests Discriminate Against LGBTs.

EEOC's Next Step?

The White House report recommends that the EEOC, as one of the federal government's lead civil rights agencies, expand its technical expertise to be able to identify practices and outcomes facilitated by big data analytics that have a discriminatory impact on protected classes. The EEOC's next step may be to call on some of the same resources used by the White House review group led by John Podesta at the three workshops held during the 90-day review period leading to the issuance of the White House report:

• Big Data Privacy: Advancing the State of the Art in Technology and Practice
• Organized and co-hosted by the MIT Big Data Initiative at CSAIL and the MIT Information Policy Project 
• The Social, Cultural & Ethical Dimensions of “Big Data”
• Organized and co-hosted by Data & Society Research Institute and the NYU Information Law Institute
• Big Data: Values and Governance
• Organized and co-hosted by the UC Berkeley School of Information and the Berkeley Center for Law and Technology

The suggestion is that some of the individuals and organizations that co-hosted, presented and supported those the three workshops be persuaded to take their shows on the road, assisting the EEOC and the other federal civil rights agencies (Department of Justice, Federal Trade Commission and Consumer Financial Protection Bureau)  in understanding and preventing new modes of discrimination that some uses of big data may enable, particularly with regard to housing, employment, and credit.

Punitive Damages for Illegal Medical Examinations under the ADA

In a recent decision, a Pennsylvania federal court held that an acquiring company conducted over 300 unlawful pre-offer medical exams in violation of the ADA.  Cambria Care Center (“CCC”) had purchased the former Cambria County owned nursing home and engaged Grane Healthcare (a separate, but related entity to CCC) to interview and hire employees for the new facility, which was set to open later in the year.

All 300 of the former county nursing home employees were invited to apply for new employment.More than 300 employees from the acquired company applied for positions with  Grane [the acquiring company]. Grane ultimately hired roughly 225 of the applicants. Every applicant was required to undergo a medical examination. Several unsuccessful applicants for employment filed charges of discrimination with the Equal Employment Opportunity Commission (EEOC), alleging that Grane had violated the Americans with Disabilities Act of 1990 (ADA) by conducting pre-offer medical examinations of prospective employees and declining to hire some of them because of actual or perceived disabilities.

The record demonstrates that the employees seeking employment with Grane were subjected to a formalized process consisting of unlawful pre-offer medical examinations and illicit solicitations of detailed medical information. The individuals who were subjected to these illegal examinations and inquiries, including those who were ultimately rejected, were deprived of the prophylactic protection from discrimination that § 12112(d) was designed to create.

Section 12112(d) Claims

The provisions of the ADA pertaining to medical examinations and inquiries are codified at 42 U.S.C. § 12112(d). This statutory framework is designed to shield information about an applicant’s medical condition from his or her prospective employer until after an offer of employment is made. Before an offer of employment is extended, an employer may not ask a job applicant to undergo a medical examination or inquire as to whether he or she “is an individual with a disability.”

Unlike § 12112(a), which aims to protect a discrete class of “disabled” persons from discrimination, § 12112(d) contains no language limiting the category of applicants and employees entitled to statutory protection. Consequently, an individual who is subjected to an unlawful medical examination or inquiry can successfully assert a claim under § 12112(d) without establishing the existence of a statutory “disability.” In this vein, an applicant who is rejected by an employer based on information gleaned from an illegal pre-offer medical examination or inquiry may seek redress under § 12112(d)(2)(A) even if that information does not reveal a “disabling” medical condition. A § 12112(d) violation occurs as soon as “an employer conducts an improper medical examination or asks an improper disability-related question, regardless of the results or response.”

Current Charges with the EEOC

None of the seven charges currently being investigated by the EEOC require the employer to have knowledge that the applicant has a disability.  The claim that an employer used an unlawful pre-offer medical exam does not turn on the employer’s knowledge of the applicant's disability -- and in fact does not require that the applicant have a disability.

For those employers utilizing Five Factor Model-based personality tests as an element of their screening and hiring process, the § 12112(d) violation occurs each time the applicant completes the test and the results are submitted to the employer or assessment company.

The ADA’s prohibition against pre-offer medical examinations and inquiries is prophylactic in nature. Congress was concerned that medical information gleaned from such examinations and inquiries could be used to exclude disabled applicants from further consideration for employment. In order to discriminate against an applicant “on the basis of disability,” an employer must know that the applicant is disabled. By denying employers access to medical information until after offers of employment are made, § 12112(d) aims to ensure that such information does not infect the employee-selection process. In this way, § 12112(d) deters covert discrimination against disabled applicants by forcing employers to make hiring decisions before procuring the information upon which discriminatory decisions could be based.

Reducing Employer Risk Exposure

The timing or sequencing of the testing has a significant impact. Employers could reduce risk exposure by administering the test after having provided the applicant with a conditional offer of employment. The employer would still face the risks associated with tests that discriminate against persons with disabilities, but would not face the potential for claims from all applicants who took the test.

Employers sequence the testing first not because they want to include those who are the best fit for the company culture, but because they need a quick, low-cost method of excluding a significant number of applicants. As one employer (Xco) stated in its position statement,

“The [assessment] enables [Xco]  to assess a large volume of applicants cost-effectively and provides consistency in that assessment. Without the [assessment] reviewing and assessing all individual applications would be extremely costly, both in terms of the labor resources needed to conduct such screening and the costs associated with training managers in making the predictive assessments yielded by the [assessment]. It also would result in greater variability in the reliability of the assessments made by individual managers.

Available Alternatives

Xco, and other employers act as if there are only two alternatives – use assessments (quick, low-cost) and don’t use assessments (time-consuming, costly). There are a variety of alternatives, including tests that do not constitute pre-offer medical exams and do not screen out persons with mental illness. Both Starbucks and CVS are prospering without using illegal pre-offer medical examinations and they do not appear to have put themselves at a competitive disadvantage. 

For example, contrast the stock price performance of CVS (no assessment) and Walgreens (assessment) since CVS stopped using assessments following its settlement with the ACLU in Rhode Island. Please see "The CVS Example" in When the First Domino Falls: Consequences to Employers of Embracing Workforce Assessment Solutions

Systemic Risk 

Due to the lack of variability in the online assessments, any discriminatory element that makes its way into the test algorithm – like the screening out of persons with mental disabilities due to the use of the Five Factor Model - is propagated across the entire universe of job applicants.

Congress sought “to provide clear, strong, consistent, enforceable standards addressing discrimination against individuals with disabilities.” 42 U.S.C. § 12101(b)(2). Covered employers cannot erode those standards by procuring detailed medical information about applicants for employment and contending, at the end of the day, that such information has never been used to the detriment of those applicants. If it were otherwise, disabled individuals would be vulnerable to several forms of discrimination that the ADA was designed to prevent. Since most employment decisions involve elements of discretion, it is relatively easy for an employer to “concoct a plausible reason for not hiring” a particular individual. A decision declaring the admitted § 12112(d) violations to be “harmless” would seriously undermine the ADA’s policy of prophylactic deterrence.

Compensatory Damages 

Before 1991, plaintiffs proceeding under Title VII could only seek “equitable” remedies. Backpay was the primary form of monetary relief available to aggrieved individuals. Section 102 of the Civil Rights Act of 1991 added compensatory and punitive damages to the remedies otherwise available under Title VII and the ADA. The relevant statutory language, permits a “complaining party” to “recover compensatory and punitive damages” from a covered entity responsible for violating § 102 of the ADA. The provisions governing medical examinations and inquiries are included within § 102.

The compensatory damages available to individuals aggrieved by violations of Title I include remuneration for “future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other nonpecuniary losses.” The total amount of compensatory and punitive damages available to “each complaining party” is capped at anywhere from $50,000 to $300,000, depending on the number of individuals employed by the covered entity.

Punitive Damages

The Civil Rights Act of 1991 permits any party to “demand a trial by jury” “[i]f a complaining party seeks compensatory or punitive damages” under Title I. The disjunctive wording of this language suggests that a plaintiff can seek an award of punitive damages without seeking an award of compensatory damages. Several Courts of Appeals have concluded that punitive damages may be assessed under the relevant statutory provisions even if no compensatory damages are awarded.

Employers will likely argue that most applicants should receive little, if any, in the way of compensatory damages like backpay. The argument is based on the limited number of positions available as compared with the large number of applicants; only a small percentage of the applicants could have been hired to fill the positions. The expansive scope of compensatory damages – including nonpecuniary losses – plus the availability of punitive damages is designed to provide relief to applicants whose rights have been violated.

As noted below, precluding awards of punitive damages in cases involving no easily quantifiable physical and monetary harm would quell the deterrence that Congress intended to provide when it enacted § 12112(d). The statutory caps on damages ensure against limitless awards in cases of insubstantial harm.

The damages cap for each of the seven companies subject to the EEOC charges is $300,000 per applicant.

A plaintiff seeking punitive damages under Title I must demonstrate that the offending employer “engaged in a discriminatory practice or discriminatory practices with malice or with reckless indifference to [his or her] federally protected rights.” In Kolstad v. American Dental Association, the Supreme Court construed this language to mean that a covered employer must “discriminate in the face of a perceived risk that its actions will violate federal law” in order to be liable for punitive damages.

Reckless Indifference

Examples of reckless indifference by the seven companies subject to the EEOC charges may include:

• Using an assessment is based on the Five Factor Model of personality, which serves as a basis for categorizing and diagnosing personality disorders in the Diagnostic and Statistical Manual of Mental Disorders.
• Failing to perform any adverse impact or validation studies on persons with disabilities. As Kronos stated in one of its filings in the EEOC litigation, “No adverse impact or validation studies have been performed by Kronos … with respect to potential adverse impact on individuals with disabilities.”
• Continuing to use the assessment for years after having been put on notice that the assessment may be an illegal pre-offer test. Contrast Kroger with CVS.
• Asking questions are neither “directly relevant” to the job nor “plainly job-related.” The questions, designed to reveal information about individuals’ “openness,” “conscientiousness,” “extraversion,” “agreeableness,” and “neuroticism,” based on the Five Factor Model, do not seek information about the ability of an applicant to perform the day-to-day functions of a job.
•  Ignoring the almost 40-year old mandate of the Supreme Court in Albemarle Paper Company v. Moody, 422 US 405 (1975) that a test should be validated on people as similar as possible to those to whom it will be administered (i.e., persons with disabilities). The Court further stated that differential studies should be conducted on minority groups – like persons with mental illnesses - wherever feasible. 
• Relying solely on the statements of the assessment company, without any independent review or verification by the employer. The EEOC fact sheet sets out selection and administration guidelines, including  that an employer: (i) ensure that tests and selection procedures are not adopted casually by managers who know little about these processes; (ii) ensure that the tests are valid, independent of the test vendor’s documentation; and, (iii) determine whether there is an equally effective alternative selection procedure that has less adverse impact and adopt that alternative procedure if a selection procedure screens out a protected group.

Punitive Damages Do Not Require Showing of Tangible Harm

The statutory language does not condition an award of punitive damages on a showing of tangible harm. It is worth noting that the term discriminatory practice” is defined more broadly in relation to Title I than it is in relation to Title VII. Although the term includes only “discrimination” in the Title VII context, it is broad enough to encompass “violations” of the ADA that might not constitute “discrimination.”

The breadth of this language, which specifically defines a term appearing in the portion of the statute governing awards of punitive damages, suggests that Congress intended to provide for assessments of punitive damages against employers responsible for intentionally violating Title I’s prophylactic provisions. Precluding awards of punitive damages in cases involving no “easily quantifiable physical and monetary harm would quell the deterrence that Congress intended” to provide when it enacted § 12112(d). The statutory caps on damages “ensure against limitless awards in cases of insubstantial harm.”

Accordingly, the EEOC can seek punitive damages on behalf of the applicants who were unlawfully subjected to pre-offer medical examinations and inquiries even if those applicants are not otherwise entitled to compensatory damages.

Since the examinations in this case were illegally conducted at the pre-offer stage, the EEOC can seek backpay and compensatory damages on behalf of any applicant rejected based on unlawfully procured medical information, regardless of whether his or her injuries are attributable to “discrimination based on a disability.” Moreover, recovery may be sought for less tangible injuries caused by the examinations and inquiries, irrespective of whether those injuries manifested themselves in the form of personnel decisions (suggesting that an “emotional” injury could constitute “actual damage”).