Pre-employment testing can take considerable time, effort and money. Given these drawbacks, what’s in it for business owners?

Studies have shown that pre-employment testing can be effective in reducing turnover and improving employee productivity. That message seems to have resonated with employers. A survey conducted recently by the American Management Association shows that 33 percent of firms use some form of psychological testing before hiring someone, 43 percent use basic skills testing like reading, writing and math, and 69 percent used specific job skills testing.

Although many U.S. firms use pre-employment testing, it’s not without some anxiety stemming from a number of legal issues associated with pre-employment testing.

Title 7 of the Civil Rights Act

The Civil Rights Act of 1964 says it is “unlawful for an employer to refuse to hire any individuals, or otherwise discriminate against any individual with respect to his employment, because of race, color, religion, sex or national origin.”

The challenge facing employers who use pre-employment testing is to steer clear of any action that might be considered to be in violation of Title 7. Title 7 says that employers can act upon the results, “of any professionally developed ability test” so long as it is not used to discriminate against a job applicant because of race, color, religion, sex or national origin. What that tells is that Title 7 permits use of skills testing and psychological testing if properly used. The danger lurking with the use of pre-employment testing is if the employer IS shown to be intentionally discriminating against employees in one of the above “protected groups” or the tests adversely impact minority job applicants and the test is shown to be not job-related for the position. Since the Civil Rights Act of 1964 was passed, there hasn’t been one instance where the courts ruled that an employer’s use of personality tests created an adverse impact on protected groups. That of course doesn’t mean that there won’t be such a finding in the future, especially if a litigant can show that such tests were used to intentionally exclude minorities or other protected groups.

One way to steer clear of any problems with the use of personality tests and skill tests is to use the same tests for all applicants for a specific position. Then, if anyone complains, one’s defense can be that one subjected every job applicant to the same test so how could one be discriminating? To make sure one stays out of trouble, provide reasonable accommodations for job seekers who need it; like a large computer screen for visually impaired applicants, or translation services for non English-speaking employees (assuming that the ability to speak English is not one of the job requirements).

The issue of “adverse impact” was raised in the Civil Rights Act of 1991. The Supreme Court said that if someone wants to prove adverse impact, they have to show that one’s employment practices have a significant adverse impact upon a protected group. And the Equal Employment Opportunity Commission has issued “uniform guidelines on employee selection procedures.” Under these guidelines an adverse impact is considered to exist if the selection rate for any minority group is less than 80 percent of the selection rate for the group with the top rate (non minorities).

In order to prevent adverse impact, one should conduct adverse impact studies whenever one introduces a new test or introduces a test to a new location. If one finds adverse impact, try and figure out what’s causing it and take steps to eliminate it before any job applicants sue the company.

Usually, personality tests do not have an adverse impact on protected groups and there have been very few adverse impact cases that have been taken to court and won.

Privacy rights

The right to privacy is well founded in American law. This has caused specific recognition of this right in employment testing by some states, amongst them New York and California, by enacting laws that specifically provide privacy standards for employers. The net effect of this is to require pre-employment tests to be both non intrusive and job-related. Questions about sexual preferences and/or political views are a no-no.

One approach to avoid raising any privacy issues in pre-employment testing is to use an outside firm to administer the test. This approach provides for an unbiased third-party to administer the test and keep the actual responses confidential. One has access to the overall test results but aren’t given information concerning an applicant’s response to individual test items. This approach eliminates most privacy issues.

Negligent hiring

There is a growing trend toward holding employers accountable for failure to administer pre-employment tests in certain situations. For example, if an airport hires someone to be a security guard, it can be held guilty of negligent hiring if it doesn’t check an applicant’s background and lets someone with a criminal record or something similar become a security guard. Many states now actively enforce this concept and employers (in some instances) have been found liable for crimes committed by their employees, such as battery or assaults on customers or co-workers. One can be held liable for hiring someone who injures other employees, customers or clients if one had notice or should have had notice that he was likely to be dangerous.

Liability for negligent hiring depends on whether one placed someone with a negative background into a position where it could be argued one should have foreseen that the individual that was hired posed a threat to others.

To protect oneself from a negligent hiring claim, one should perform an appropriate background check on applicants. What is appropriate depends on the type of business one’s in and the position the applicant is seeking. An employer is most at risk for negligent hiring claims if one’s business involves substantial contact with third parties, like customers or clients. Think what the applicant’s responsibilities will be and what harm might come from giving the position to someone who’s potentially dangerous.

How extensively can one probe? First and foremost, always obtain the consent of applicants before conducting background checks. This is especially important if the background checks one is performing fall under the Fair Credit Reporting Act. The FCRA requires one to obtain consent before obtaining a consumer report on an employee or job applicant. The provisions of the FCRA apply any time one decides to use a third party to investigate applicants.

Before making a job offer to anyone, administer appropriate pre-employment testing to make sure an applicant fits the company’s needs and expectations. Do a background check to spot driving problems, bad credit history, etc., because it has been shown that future behavior can be anticipated/predicted by past behavior. Don’t check an applicant’s arrest record. That’s against the law except for limited exceptions that don’t apply to our industry. Federal and state laws prohibit asking about arrests—as distinguished from convictions—for a number of reasons, most notably that discriminating against applicants with arrest records has a disparate impact on minorities. Recent headlines regarding racial profiling show that minorities are still much more likely than whites to be pulled over and arrested for illegitimate reasons.

One has an obligation to ask applicants about criminal convictions to avoid hiring someone who might pose a threat to other employees and customers. The more sensitive the position, the greater responsibility one has to conduct a thorough background search. But there are limits under both federal and state laws. Running criminal background checks on applicants can also result in discrimination charges if one rely on the information as an automatic bar to employment. In other words, don’t have a rule stating that any conviction will disqualify an applicant from consideration.

The EEOC has issued a set of factors that one can use to decide whether one can refuse to hire a job applicant because he was convicted of a crime. According to the EEOC, an employer must consider:

• The time of the conviction;

• The nature of the conviction;

• The number of convictions, and;

• The applicant’s immediate past employment record.

For example, a minor drug conviction years ago generally should not be used to bar an applicant from most positions but it would be OK to consider such a conviction if the job involved being around controlled substances in a hospital. Likewise, one shouldn’t use a drunk driving conviction as a reason not to hire an applicant unless the job applicant’s duties will include driving. Be careful though. Applicants who have successfully attended substance abuse treatment programs are protected under the Americans with Disabilities Act as “disabled” as long as they are not currently using illegal drugs.

A conviction for a violent crime can be used to disqualify an applicant for almost any position—especially those that involve entering customers’ homes. If the job involves handling money, it’s a good idea to use criminal convictions for theft, embezzlement, forgery, and the like as a bar to employment.