Hiring figures from the Administration and payroll company ADP, together with U.S. economic measures more generally, show a slow but steady climb back from the economic depths of 2009.  This has resulted in some ompanies at last have money to spend; some are spending it by hiring new workers.  This two-part article looks at some of the factors employers should consider when deciding to test prospective hires. 

Job growth statistics appear to be strongest across service industries and successful technology companies and even (albeit haltingly) among more traditional U.S. manufacturers.  Other employers – manufacturers especially – remain wary of hiring costs.  With ongoing concerns about Chinese and European demand plus the prospect of higher U.S. interest rates, many U.S. companies continue using contract workers and “productivity gains” (read outsourcing) to satisfy limited growth in global demand.  Among employers in hiring mode, pre-employment testing is increasingly widespread.  Several factors drive this trend.

Why More Employers Are Using Tests

  • Some jobs lend themselves especially well to testing.  Call center positions, for example – whether for a large financial institution or a public utility – draw a large number of applicants, many of whom meet what the OFCCP would call “basic qualifications.”  Faced with a big batch of similarly qualified applicants, employers filling call center positions need something beyond an application form, a resume, and a 10-minute structured interview to identify candidates likely to become dedicated, competent employees.  In a different vein, IT positions – whether software development or desktop support jobs – require an objective/measureable knowledge base and skills set, and/or demonstrable aptitude.  None of these gets conveyed very well on an application/resume or during an interview.
  • Legal restrictions on other hiring tools make tests one of the few such tools that are not closely regulated or outright prohibited in various jurisdictions.  Numerous states and municipalities restrict criminal background and credit checks, particularly at the pre-interview stage.  Many of these restrictions echo EEOC’s Guidance on these subjects. See Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 (April 2012).  (We’ve previously blogged about this issue HERE and HERE.)  The legal weight of that guidance in court is limited; some federal courts give little deference to EEOC positions contained in mere guidelines – as opposed to regulations promulgated after formal notice and comment procedures.  Still, EEOC guidance telegraphs to employers the position EEOC will take at the administrative charge stage and in litigation.  Between the patchwork of state and local laws and the EEOC’s opposition, many employers have stopped or pared back their use of background checks.
  • The sizeable number of long-term unemployed individuals now returning to the labor market is another reason hiring tests are in vogue.  Some of these individuals seem overqualified for positions they are seeking, which may raise questions about their genuine interest or the likelihood of their remaining on the job long-term if hired.  Other such individuals have a gap in recent employment that raises questions about the currency of their skills and/or knowledge base.  Valid pre-employment tests can help answer both sets of questions.

When To Test

At what point in the application process should a test be administered?  This an important question that any employer implementing a test should consider carefully.  The question can be answered from various standpoints, all of which may be relevant to the inquiry.  One is whether the test is a pre-employment medical examination under the Americans With Disabilities Act.  (In that event, the test can only be administered at the post-offer stage – as the final step before hiring, administered only after a conditioned offer has been extended.)  Don’t forget, too, that the ADA’s medical exam and inquiry provisions apply to more than just pre-employment physicals.  A physical agility or physical abilities test also may be considered a medical exam under the ADA if it is administered by a health professional, or if heart rate, blood pressure or BMI (body mass index) is administered as part of the exam.

The purpose of a pre-employment test is another factor to consider in deciding when to administer a test.  Is the test a 10-minute online tool to identify candidates with a basic understanding of what the job entails?  If so, it may well make sense to test all who apply and are advanced after an initial application/resume screen for basic conditions – as a means for determining which individuals with basic qualifications should be interviewed.  Conversely, if the test is a 2-hour process that includes a job simulation at the employer’s facility, then it makes sense to administer the test at a later stage to a smaller group of candidates, perhaps those who are invited for a first interview or in tandem with a second/final interview.

Legal considerations also play a role in deciding when in the process to give a test.  Assume that the test adversely impacts individuals in a protected class but has been properly validated; or, alternatively, that the test has no adverse impact and the employer therefore decided not to have the test validated.  In either event the test may still entail legal risk: validity studies that purport to show a test’s job-relatedness may not, in fact, do so, or may not otherwise comply with all facets of the Government’s Uniform Guidelines on Employee Selection Procedures (click HERE to jump to the Code of Federal Regulations).  Alternatively, the employer that decided not to validate its test may have been misguided: perhaps that employer (or the test provider/administrator) wrongly measured adverse impact against “all minorities” instead of against particular minority groups.

The point is that virtually all pre-employment tests carry some legal risk.  The question, then, is how best to manage that risk and at the same time enable the employer to choose the most qualified candidate(s) in a cost-effective manner.  Here, informed legal counsel and sound judgment become imperative.  Should the test be given early in the hiring process to all or most candidates?  A test given early on will screen out more applicants or potential applicants – perhaps hundreds instead of a handful.  However, individuals rejected at pre-interview stage typically don’t know why they were rejected, and are thus less likely to file a charge or bring suit challenging the test’s validity.  These individuals may have applied to dozens of companies, and may or may not view the position in question as their “dream job” (or at least their job of choice).

By contrast, the candidate who fails a test late in the hiring process will likely know (or have a good sense of) why she was rejected.  If she feels the test was biased or the testing process was otherwise unfair, she’ll be more likely to make a legal stink – not only because she knows, or thinks she knows, why she was rejected, but also because she’ll have invested more time, energy, emotion and thought into the job in question as compared to someone rejected earlier in the process.