Vol. 48, No. 7
A Hire Standard
Improving employee selection can help keep you fully staffed--and out of court.
Most human resources professionals should be aware that a panoply of federal and state laws prohibit workplace discrimination based on such factors as race, color, creed, national origin, religion, sex and age—to name just a few. Some employers, however, may not fully understand the extent of potential liability involved with making hiring decisions. Perhaps most potentially frustrating for employers is the fact that their employee selection systems can be found illegally discriminatory even in the absence of invidious intent.
The legal risks associated with hiring systems may be especially great now, when unemployment rates are relatively high. When employment opportunities were plentiful, workers who were passed over for a job opportunity had far less incentive to wonder why or to take legal action. After all, another—perhaps better—job was likely around the corner. Now that the economy has slowed and jobs are no longer plentiful, workers may be more likely to question why they were not hired—and to look for legally actionable causes.
The challenge for HR professionals is to create an employee selection system that is efficient and beneficial, but that also minimizes vulnerability to legal challenge. The following seven tips can help guide you in assessing the general vulnerability of your employee selection procedures. Where necessary, consider revising procedures to reduce your organization’s legal risk.
Tip No. 1: Formalize Your Selection Procedures
Employee selection systems should be formalized and structured. While there is nothing to prevent workers from filing discrimination claims, there are mechanisms in the law for weeding out claims that simply have no chance of succeeding—as when a claimant cannot establish the basic elements of her claim, i.e., the prima-facie case. Summary judgment is the primary weeding-out mechanism employers can use to bring an end to such claims early in litigation.
Employers usually win summary judgment when plaintiffs cannot prove they were qualified for a position or that they even applied for the job. However, there are exceptions. In the case of race bias suits, a plaintiff may be excused from proving he applied if there is direct evidence of discrimination, which generally includes only conduct or statements that rise to a particularly high level of proof of invidious intent. Recently, however, in Lockridge v. Board of Trustees of the University of Arkansas, 294 F.3d 1010 (8th Cir. 2002), the Eighth Circuit expanded the direct evidence concept to include situations where an employer fails to establish “clear” (i.e., “fixed or reasonably objective”) standards and procedures for promoting or hiring.
In Lockridge, the University of Arkansas sought a new dean of industrial technology and workforce development. Howard Lockridge never applied and soon after the search began, Tracy McGraw, a white male, was recommended and hired. The court found that the employer’s most significant problems were its failure to show what its hiring and promotion procedures actually were or that they were applied consistently. Based on the premise that direct evidence of discrimination includes evidence that an employer has failed to establish a clear personnel procedure for promotions, the court held that a reasonable jury could conclude that the “random and subjective” promotion process used by the university constituted direct evidence of a discriminatory practice, precluding the plaintiff from having to prove he applied.
Based on Lockridge and similar cases, it is clear that employers that have formalized and structured employee selection systems will have an easier time disposing of suits by non-applicants. Stated differently, employers that fail to structure their employment selection systems may unnecessarily open themselves to costly litigation not only from employees and applicants, but also from individuals who never even applied for a job.
Tip No. 2: Watch For Adverse Impact
Regardless of how formal or structured employee selection systems are, and despite a lack of invidious intent, employers may face liability if their practices adversely affect applicants in a legally protected class. Prima-facie evidence of adverse impact exists whenever the selection rate for any protected group is less than 80 percent of the rate for the most frequently selected group.
Significantly, however, if a hiring system contains multiple hurdles (such as an initial pre-screening by phone, followed by an initial in-person interview and a second interview for finalists), then every stage must be tested for adverse impact. This is true even if the end result yields no adverse impact.
Studying the adverse impact of a personnel selection system is time well spent because, even if a study reveals adverse impact, consultants generally can run validity studies and, if necessary, modify the selection procedures.
Tip No. 3: Formalize Subjective Selection Components
One potential source of adverse impact is subjective evaluation. While instincts and intuition can be valuable aids in personnel selection, unguided gut feelings about a candidate’s fit are dangerous, legally speaking. Subjective evaluations allow stereo.types and latent biases to enter the process. Such prejudices can lead to negative perception and ultimately result in a decision to refrain from hiring candidates who are, in fact, qualified.
Subjective evaluation can be valuable, however, and employers should not eliminate it entirely from personnel selection processes. Nonetheless, as the U.S. Supreme Court explained in Watson v. Fort Worth Bank & Trust, 487 U.S. 977 (1988), it is critical that subjective criteria, like objective criteria, be valid. To establish that subjective evaluations are based on valid criteria, employers must be able to identify those criteria. The next step toward using subjective evaluation in a valid, legally defensible manner is to standardize subjective evaluations by uniformly following set procedures established in written policies.
Generally, courts require plaintiffs to identify specific employment practices that cause the alleged disparities. (See 42 U.S.C. § 2000e-(k)(1)(B)(i)). On the other hand, as stated in Stender v. Lucky Stores, Inc., 803 F. Supp. 259, 335 (N.D. Cal. 1992), if employers use subjective evaluations to select personnel but fail to provide their managers with meaningful criteria to guide their evaluations, courts will not require plaintiffs to pinpoint particular aspects of the system that are unfavorable. Employers obviously do not want to make plaintiffs’ cases easier and can avoid doing so by providing their managers with specific criteria and methodology to use in evaluating candidates.
In sum, supervisors must apply their instincts and intuition in a concerted manner, specifically assessing applicants’ qualifications according to identifiable, job-related criteria. Employers must standardize subjective evaluation and ensure the validity of the criteria on which subjective evaluations are based.
Tip No. 4: Use Only Professional, Valid Tests
Even if evidence exists that an employer’s hiring system has an adverse impact, the employer may still prevail if the selection procedure is valid and consistent with business necessity. Tests developed or selected by industrial/organizational psychologists for use in selecting candidates for a particular job are likely to be considered job-related by a court. Accordingly, employers are wise to use professionally developed employee selection devices that have been specifically tested for use with a particular job.
Industrial/organizational consultants also can help employers find tests that are valid in every sense of the term, meaning the consultants will measure jobs through job analyses, develop or select validated tests, and assist in administering such tests to applicants for the purpose of identifying candidates likely to possess the requisite knowledge, skills and abilities necessary to perform the job well.
The U.S. Department of Labor has encouraged the use of tests of this nature. Employers should use employment-related tests with care, however, making sure that the tests:
- Are not used to intentionally discriminate.
- Do not have an adverse impact on protected classes.
- Are job-related for the position in question.
- Are consistent with business necessity.
By considering and documenting all these elements, employers should be in a good position to defend the legality of their employment assessments. The work up front will pay off with lower litigation expenses in the future.
Tip No. 5: Use Only Non-clinical Tests
There is a significant difference between clinically oriented psychological assessments that measure such things as intelligence, depression or the like and those that are specifically developed by professional test specialists for a particular business or industrial use.
Clinically oriented psychological assessments are medical in nature and the information obtained potentially violates the Americans with Disabilities Act, which states that employers “shall not conduct a medical examination or make inquiries as to whether such applicant is an individual with a disability or as to the nature and severity of such disability.”
The information contained in many non-employer-specific, clinical assessments also is dangerous because such tests often ask for personal information, which may be construed as violating a candidate’s right to privacy.
You should think twice before using any employment test that was not professionally selected for use with the job in question, and generally should refrain from using tests that are clinical in nature.
Tip No. 6: Minimize Adverse Impact
Even if you can show valid business reasons for using components of your personnel selection system that have an adverse impact on members of a protected class, you should nonetheless seek out alternative selection methods that are equally valid but would have a less discriminatory impact.
While complainants—not employers—will have the burden of proving the existence of less discriminatory alternatives, employers are wise to consider these options before settling for procedures that have an adverse impact. The failure to consider such options could result in future liability that otherwise could be avoided.
Tip No. 7: Ensure Hiring Agents Are in Compliance
Some employers use psychological assessment centers to handle personnel selection. While the expertise provided by assessment centers can be valuable to employers, the law deems such centers to be agents of employers.
As a result, violations made by such centers will be attributed to employers. Simply put, psychological assessment centers are prohibited from asking job candidates the same types of questions that employers are prohibited from asking. Therefore, you would be wise to ask your agents to establish the validity of their methods. If they cannot do so to your satisfaction, you probably will not be able to meet your legal burden if challenged in court.
Employers that maintain formalized, structured employee selection systems—even if those systems include subjective evaluation—will be in a better position than employers that do not. As a result, employers should audit their existing procedures and consider making changes where appropriate. This audit should cover the entire personnel selection process, including both in-house and hired assessment centers. Where deficiencies are revealed, practices should be modified to lessen the employers’ susceptibility to legal liability.
Although an audit of the nature described above can require expenditures of time and money, the exercise is worth the cost in terms of strengthening employers’ chances of prevailing early in future litigation, or by avoiding litigation altogether. Industrial/organizational consultants and legal counsel can aid in this process. Employers have learned that being proactive, rather than reactive, will pay off.
Timothy M. Holly earned a Master of Arts degree in industrial/organizational psychology from Xavier University and a Juris Doctorate degree from the Villanova University School of Law. He currently works as a management defense attorney for the labor and employment group of the law firm of Potter, Anderson & Corroon LLP in Wilmington, Del.