Contractors: Remember to Review and Validate Your Pre-Employment Testing Practices!
By now you may have heard that Target recently agreed to pay $2.8 million to settle a Commissioner’s charge of discrimination by the EEOC originating from its Minneapolis Area Office and arising out of Target's pre-employment testing practices. According to the EEOC, three of Target’s tests excluded a disproportionate number of otherwise qualified candidates based on race and sex and were not sufficiently job-related or consistent with business necessity to otherwise justify their use.

Such tests under the circumstances alleged by the EEOC, would have violated Title VII of the Civil Rights Act of 1964. Yet another test, an assessment performed by psychologists, was, according to the EEOC, a pre-employment medical examination, which violates the Americans with Disabilities Act (ADA). To its credit, Target did discontinue use of those tests while the investigation was still pending.

While this particular case did not actually involve a federal contractor or the OFCCP, it is still instructive. Why? First, the OFCCP scrutinizes pre-employment tests at least as closely as does the EEOC. Second, federal contractors are also subject to the same federal EEO laws that apply to employers who are not federal contractors. Employees of federal contractors can file a charge with the EEOC, which could trigger an EEOC investigation, or simultaneous investigations by both the EEOC and the OFCCP.

Both the EEOC and the OFCCP have adopted the Uniform Guidelines on Employee Selection Procedures (UGESP). Under the UGESP, an employer must demonstrate that its pre-employment tests are job-related and consistent with business necessity. How does an employer prove that? It must demonstrate that it has validated the test for the specific purpose for which it is being used.

For example, in May 2012, the OFCCP filed a complaint against Leprino Foods, regarding the use of a pre-employment test called Work-Keys. The test measured applied math, workplace observation and information location skills, which, according to the OFCCP, was not relevant to skills necessary for the position in question, that of an on-call laborer. Only 49 percent of otherwise qualified minority applicants passed the exam, whereas 72 percent of otherwise qualified non-minority applicants passed. Leprino Foods paid $550,000 to settle claims that the tests had a discriminatory impact on African-American, Hispanic and Asian applicants. Similarly, in November 2013 M.C. Dean agreed to pay $875,000 to settle claims that its pre-employment testing excluded a disproportionate number of minority applicants and was not job-related and consistent with business necessity.

If the Target settlement is a wake-up call for non-contractor employers, it is more so for those employers who are also federal contractors. Federal contractors would therefore be wise to take the following points and best practices to heart:
  • The OFCCP does not merely look at overall applicant-to-hire adverse impact analyses; it will actually analyze each stage—screening, testing, interview, offer, rejection, etc.—for adverse impact;
  • If there is adverse impact at the testing stage, the employer must validate the test(s) by showing how the test is job-related and consistent with business necessity. The OFCCP will request validation materials and send them to its Industrial-Organization Psychologist for review. Materials must show: i) whether the test has been validated recently; ii) whether it has been validated for the position in question; and iii) there are no less discriminatory methods available for achieving the same predictive results of job performance.
  • Employers whose tests have: i) never been validated; or ii) never been validated for the specific position for which they are being used; or iii) have not been validated for their specific company; or iv) haven not been reviewed by someone other than the testing vendor who created the test; or v) have not been re-validated as the position changed over time are at risk in audits, and are at risk for discrimination findings based on their pre-employment testing practices.
  • Employers who want to minimize their exposure during audits or to discrimination charges or complaints by employees need to analyze their tests’ potential adverse impact and existing validation.
  • It does not matter that a third party created and/or administers the pre-employment tests. The employer will be held accountable for any tests that result in adverse impact and that are not properly validated.
For more information, contact Ahmed Younies at (714) 426-2918, ext. 1, or