DOL Cracks Down on Company’s Use of Hiring Tests

Make sure your hiring managers are not assessing applicants without HR’s knowledge

Allen Smith, J.D. By Allen Smith, J.D. June 14, 2016

In an all-too-common situation, an HR professional is shocked to discover that managers at the organization are using pre-employment tests without HR’s permission.

Alissa Horvitz, an attorney with Roffman Horvitz in McLean, Va., said, “I cannot begin to count the number of times that an HR professional would approach me at industry meetings and confess that he or she just discovered that one of the business leaders found a test off the Internet and has been using it with applicants without telling HR.”

The scenario frequently unfolds like this: “The hiring manager never heard of the Uniform Guidelines [on Employee Selection Procedures, which apply to employers covered by Title VII of the Civil Rights Act of 1964 and federal contractors], was not collecting race and gender data, was not saving the candidates’ test results, was not calculating pass rates by race or gender, and cannot explain why he or she decided to set the passing score at 70,” she noted.

All the manager has to say is, “When we were in high school, 70 was passing, so I thought 70 was a good pass score here, too.”

“That is why HR professionals keep antacid in their desk drawers,” Horvitz joked.

Compliance Evaluation Findings

The Department of Labor (DOL) entered a conciliation agreement June 7 over applicant tests with the Aqualon Company, a subsidiary of Ashland Inc., which produces chemicals and is based in Covington, Ky. Whether its managers did in fact skip over the HR department isn’t clear from the DOL announcement.

In a scheduled compliance evaluation, the Office of Federal Contract Compliance Programs (OFCCP) found that Aqualon used a discriminatory test as part of its selection process that adversely affected 660 black applicants in the Richmond, Va., area who applied for entry-level transition operator positions. The test was not job-related and did not meet the requirements of the Uniform Guidelines, according to the OFCCP.

The company, which has not admitted liability, will pay $175,000 in back pay and interest to the black applicants. It also agreed to hire four of the black applicants. In addition, Aqualon has agreed to stop using the test for its entry-level positions, and to revise its hiring and record-keeping practices to comply with Executive Order 11246.

The executive order prohibits federal contractors like Aqualon from discriminating on the basis of an applicant’s race, color, religion, sex, sexual orientation, gender identity or national origin. The executive order also requires government contractors to “take affirmative action to insure that equal opportunity is provided in all aspects of their employment.”

Colleen Lewis, an attorney for Ashland with Dismore in Cincinnati, told SHRM Online that the OFCCP claimed that the WorkKeys test used as part of the selection process was not validated, which Aqualon disputed. WorkKeys measure such skills as reading, math, listening, locating information and teamwork.  “We made a business decision to bring to an end a costly three-year-old audit, ” Lewis said. She added that the conciliation agreement recognized the company already hired four applicants who previously had applied for the transition operator job, so there is no requirement for additional hiring. She said that the transition operator position was eliminated in 2014.

Uniform Guidelines

The Uniform Guidelines on Employee Selection Procedures provide that employers that administer pre-employment tests collect the race and gender of every applicant. The employer should calculate the pass rate by each race and gender, under the guidelines. When the pass rates for each gender and race are nearly the same, the test is presumed nondiscriminatory.

However, if the pass rates for one gender or one race are below 80 percent of the highest group’s pass rate, the Equal Employment Opportunity Commission and the OFCCP become concerned.

“Employers get 20 percent in wiggle room,” Horvitz said. “Once the pass rates fall below 80 percent of the highest group’s pass rate, the enforcement agencies infer that the test is discriminatory, and the burden shifts to the employer to explain why it should be allowed to continue using a test that it knows is discriminating against one gender or race.”

In addition, it’s important to realize that when an employer administers a test to thousands of applicants a year, even small differences in the pass rate could be statistically significant, she cautioned.


If the test results in an adverse impact on applicants of a particular race or gender, the test must be validated to show it is job-related, under the guidelines.

A properly validated test means that the test has been determined to predict job performance for a specific role, Jeffrey Ross, an attorney with Seyfarth Shaw in Chicago, said. “That usually means that the more successful an [applicant] performs on the test, the more likely the employee will perform successfully on the job.”

“There are many types of employment tests, such as job sample tests, intelligence tests, cognitive ability tests, cognitive skills tests, physical agility tests, physical ability tests and personality tests,” he noted. “Any type of test can run afoul of the guidelines if it causes an adverse impact and is not job-related.”

“The validation work should include a job analysis of the employer’s position to be tested to determine what knowledge, skills and abilities (KSAs) should be tested for,” said Jennifer Seda, an attorney with Jackson Lewis in Denver. Industrial-organization (IO) psychologists should perform validation work under the attorney-client privilege to ensure that the test evaluates the right KSAs and sets cut scores appropriately based on each position. The employer also should consider alternatives to pre-employment tests, she added.

“If [you are] purchasing an off-the-shelf test, ask the vendor if it has been validated, and ask for the technical manual and validation work they’ve completed so you can have it reviewed by an independent IO psychologist,” Seda said. “If you can determine how much validation work the vendor has already done, you may be able to piggyback on what they’ve already done more cost-effectively—such as through a transportability study to transport their general validation work to your specific jobs—to withstand OFCCP scrutiny.”

While many test vendors market their tests as validated, Horvitz noted that “just because the vendor says the test was validated, [this] does not mean that the test’s validation will in fact comply with the Uniform Guidelines.”

An employer should “not be penny-wise and pound-foolish. Retain a third-party IO psychologist to evaluate the test vendor’s validation documentation and ensure it meets the validation requirements set forth in the Uniform Guidelines.”

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.



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