Employment Testing: Hot Button Issue for EEOC and OFCCP

On October 30, 2013, the U.S. Department of Labor announced that federal construction contractor M.C. Dean Inc. had settled allegations that it failed to provide equal employment opportunity to 381 African American, Hispanic and Asian American workers who applied for jobs at the company's Dulles headquarters. A review by the department's Office of Federal Contract Compliance Programs determined that the contractor used a set of selection procedures, including invalid tests, which unfairly kept qualified minority candidates from securing jobs as apprentices and electricians.

"Our nation was built on the principles of fair play and equal opportunity, and artificial barriers that keep workers from securing good jobs violate those principles," said OFCCP Director Patricia A. Shiu. "I am pleased that this settlement will provide remedies to the affected workers and that M.C. Dean has agreed to invest significant resources to improve its hiring practices so that this never happens again."

Under the terms of the agreement, M.C. Dean will pay $875,000 in back wages and interest to 272 African American, 98 Hispanic and 11 Asian American job applicants who were denied employment in 2010. The contractor will also extend 39 job offers to the class members as opportunities become available. Additionally, M.C. Dean has agreed to undertake extensive self-monitoring measures and personnel training to ensure that all of its employment practices fully comply with Executive Order 11246, which prohibits federal contractors and subcontractors from discriminating in employment on the bases of race, color and national origin.

As stated in the Affirmative Action & OFCCP Law Advisor:  

This settlement provides (at least) two lessons to all federal contractors.  First, the OFCCP is digging deeper than just the overall applicant-to-hire adverse impact analyses.  Where there is overall applicant-to-hire adverse impact in the hiring process, the Agency will analyze each stage (screen, test, interview, offer, etc.) in the hiring processes for adverse impact.  Second, where there is adverse impact at the testing stage, employers must evaluate the validity of their “tests.”  In these cases, OFCCP will request and send the validation materials to its Industrial-Organization Psychologist for review, so it must be able to withstand scrutiny, including whether the test has been (i) validated recently, (ii) validated for the employer’s specific position, and (iii) that there are not less discriminatory methods for achieving the same predictive results of job performance.   

In particular, employers who are using employment tests that have never been validated, have not been validated for the specific position for which they are being used, have not been validated for their specific company, have not been reviewed by someone other than the testing vendor who created the test, or have not been revalidated as the position changed over time may not realize they may be “at risk” in these audits. 

In short, own each step of your hiring process – even if a third-party testing vendor created and/or administers your test, the employer will be held accountable if the test causes adverse impact and is not properly validated.  Employers need to get in front of these testing issues by analyzing the test’s potential adverse impact and existing validation to minimize exposure during audits.  Notably, this has also become a “hot button” for EEOC, so taking a close look at your tests can help minimize exposure to both OFCCP and EEOC claims.

Positive Trending for Claims Challenging the Legality of Pre-Employment Assessments

A variety of factors are trending in favor of eliminating the use of pre-employment assessments that violate the Americans with Disabilities Act (ADA) and the Rehabilitation Act of 1973, including:

• Implementation of the EEOC Strategic Enforcement Plan for 2013-2016

• The first national priority of the EEOC in the strategic enforcement plan is “eliminating systemic barriers in recruitment and hiring.”
• “[P]eople with disabilities continue to confront discriminatory policies and practices at the recruitment and hiring stages. These include … the use of screening tools (e.g., pre-employment tests …) “

• EEOC Systemic Investigation of Pre-Employment Testing and the ADA

• Stemming from more than six years of litigation by the EEOC against Kroger and Kronos 
• September 14, 2012 Third Circuit Court of Appeals decision in EEOC v. Kronos Incorporated
• It is “a proper inquiry for the EEOC to seek information about how these tests work, including information about the types of characteristics they screen out….“ Third Circuit Court of Appeals (September 14, 2012)
• Transfer of two charges from Atlanta EEOC to the EEOC office leading the systemic investigation

EEOC Focus on Disability Discrimination Litigation

• ADA claims covered the biggest percentage of the EEOC’s yearly litigation filing activity for FY 2013 
• The pie chart below provides a snapshot of the cases filed by the EEOC in the last week of the fiscal year and shows that almost half of the cases filed were based on disability discrimination.

• CVS/Rhode Island ACLU Settlement

• CVS eliminates use of pre-offer assessment as a consequence of claim by ACLU that questions from the assessment could have a discriminatory impact on people with mental impairments or disorders. 
• Please see Challenges to Pre-Employment Assessments

• Karraker Court Decision

• Rejected “form” defenses (e.g., test not reviewed by medical professional) and dismantled distinction between a test that evaluates personality and one that diagnoses mental disorders
• Please see Courts Find Tests To Be Illegal

• Adoption of the Five-Factor Model in DSM-5 by the American Psychiatric Association

• Based on two decades of research demonstrating that the five-factor model - used as the basis for many of the pre-employment personality tests - can be used as a structural model for describing and understanding personality disorders, including those within the Diagnostic and Statistical Manual of Mental Disorders (DSM)
• Please see ADA, FFM and DSM

• Significant Risk of Punitive Damages

• In addition to claims for actual or compensatory damages, which may be nominal on a per person basis, applicants may also seek punitive damages for the reckless behavior of the employers that used illegal pre-employment assessments.
• In State of Arizona v. ASARCO LLC, No. 11-17484 (9th Cir. Oct. 24, 2013), the 9th Circuit Court of Appeals held that a punitive damages award of $125,000 in an employment discrimination case finding no actual damages and $1 in nominal damages was constitutional and "did not raise judicial eyebrows."
• Please see Punitive Damages

• OFCCP issuance of non-discrimination and and affirmative action regulations for individuals with disabilities (IWDs)

• Regulations require federal contractors to achieve a 7%  workforce utilization goal of IWDs. 
• The contractors are required to achieve the 7% in each and every job group of the contractors.

Why Success Is Important

The long-term fiscal stability of the United States of America depends, in part, on ensuring that Americans with disabilities have meaningful opportunities to contribute to our collective well-being and on eliminating outdated policies that keep people in cycles of poverty and dependency.

More than two decades after the passage of the ADA, the unemployment rate for Americans with disabilities stubbornly remains nearly double that of people without disabilities, while their rate of labor force participation has continued to be abysmally low. Figures from the Bureau of Labor Statistics show that labor force participation for workers with disabilities was 20.3 percent, while the total for workers without disabilities was 69.1 percent—more than three times higher. As of April 2012, the unemployment rate for people with disabilities was 12.5 percent, versus 7.6 percent for those without disabilities.

There are many benefits of employment—work enhances skills such as communication, socialization, academics, physical health, and community skills; it factors into how one is perceived by society; it promotes economic well-being; it leads to greater opportunity for upward mobility; and it contributes to greater self-esteem. Yet only 15 percent of those with a mental disability are in the labor market. Please see So Many Job Openings, So Little Hiring.

Challenges to Pre-Employment Assessments

CVS Case Study

In July 2011, CVS and the Rhode Island Civil Liberties Union (ACLU) entered into a voluntary settlement addressing the ACLU’s complaint challenging CVS’s use of a pre-hire questionnaire that the ACLU claimed could have a discriminatory impact on people with certain mental impairments or disorders. 

The CVS questionnaire contained statements to which applicants were required to respond, including: “You change from happy to sad without any reason,” “You get angry more often than nervous,” “Your moods are steady from day to day,” and “There’s no use having close friends; they always let you down.”

Responding to a complaint filed by the ACLU, the Rhode Island Commission for Human Rights had issued a finding in February 2011 that there was "probable cause" to believe that the questionnaire used by CVS violated state anti-discrimination laws that bar employers from eliciting information that pertain to job applicants' mental or physical disabilities.

Although employers may legally ask questions designed to help determine an applicant’s personality or aptitude for a job, the ACLU’s complaint argued that questions found in the CVS pre-offer assessment “could have the effect of discriminating against applicants with certain mental impairments or disorders, and go beyond merely measuring general personality traits.” 

Pursuant to the settlement agreement, CVS agreed to permanently remove the questions at issue from its online application.

Kroger/Kronos 

The EEOC has been engaged in litigation for more than five years with Kroger and Kronos, a company that develops and administers the pre-employment assessment used by Kroger. The litigation has included two appellate court decisions; however, notwithstanding the length of the litigation, substantive issues relating to the assessment have not yet been put in front of the court.  The decisions to date have involved discovery issues, actions relating to the scale and scope of information sought to be obtained from Kroger and Kronos by the EEOC.

The case involves Vicky Sandy, who in 2007 was turned down for a cashier job at a supermarket in West Virginia after taking a 50-question test that asked her to rate the degree to which she was self-confident, always cheerful, and tried to sense what others thought and felt. The test was meant to predict whether Ms. Sandy, who is hearing and speech impaired, would be friendly and communicate well with customers. She scored 40%.

A post-test report said that she was less likely than other potential applicants to "listen carefully, understand and remember" and suggested the job interviewer listen for "correct language" and "clear enunciation," court documents say. Suggested interview questions included "Describe the hardest time you've had understanding what someone was talking about."

Ms. Sandy, who was not hired for the position, filed a complaint with the EEOC alleging she had been discriminated against because of her disability.

Pending Challenges

There are several challenges to the use of pre-employment assessments that have been filed recently with the EEOC and the Office of Federal Contract Compliance Program. The filings are not yet public, but argue that the FFM-based pre-employment assessments at issue are illegal medical examinations and that their use screens out individuals with mental disabilities in violation of the ADA.