understanding the landscape of legal issues in employee...

Understanding the Landscape of Legal Issues in Employee Selection

Presented by: Jim Kuthy Ph.D., Chris Atkinson, M. S.

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About Our Sponsor: BCG

• Assisted hundreds of clients with cases involving Equal Employment

Opportunity (EEO) / Affirmative Action (AA) (both plaintiff and defense)

• Compensation Analyses / Test Development and Validation

• Published: Adverse Impact and Test Validation, 3rd Ed., as a practical

guide for HR professionals

• Editor & Publisher: EEO Insight an industry e-Journal

• Creator and publisher of a variety of productivity

Software/Web Tools:

– OPAC®

(Administrative Skills Testing)

– CritiCall®

(9-1-1 Dispatcher Testing)

– AutoAAP™ (Affirmative Action Software and Services)

– C4™ (Contact Center Employee Testing)

– Encounter™ (Video Situational Judgment Test)

– AutoGOJA®

(Automated Guidelines Oriented Job Analysis®

)

– COMPare: Compensation Analysis in Excel

Contact Information

Jim Kuthy, Ph.D. Principal Consultant

[email protected]

(800) 999-0438 x 239

Chris Atkinson, M.S. Consultant

[email protected]

(800) 999-0438 x 120

The Presenters…

• Jim holds Masters and Doctorate Degrees in Industrial/ Organizational Psychology

• Jim has taught Psychology and Business-related courses at the University of Akron and California State University, Sacramento

• Chris holds a Masters Degrees in Industrial/Organizational Psychology

• More than twenty five combined years of experience in the employment selection field

• They have designed and validated a variety of employment tests for many employers

Presentation Outline

Basic principles of federal regulation of HR activities

Relevant laws pertaining to selection

Evidence used in determining discrimination

Validation overview

Identifying legal risks

The Importance of Legal Issues in

Selection

• Record keeping

• Fair treatment of applicants

• Determining job relatedness of selection devices

Legal policies influence

• Back pay settlements to those not hired

• Payment of punitive damages

• Change selection devices and decision rules

• Potential for quotas of under-represented groups

Consequences of non-

compliance

Selection Program Goals

1. Maximize probability of accurate

selection decisions about applicants

2. Minimizing chances of judgement of

non-job related discrimination being

made

Regulatory Model of the EEO

Societal Problems

Laws Government Regulatory Agencies

Government Regulatory

Actions

Management Response to Government

Actions

11

Federal Civil Rights Agency Relationship

Laws to be Covered

Race, Color and National Origin

Title VII, Civil Rights Act of 1964/1991

Sex Discrimination


Religious Discrimination


Age Discrimination

Age Discrimination in Employment Act

Mental and Physical Disability Discrimination

ADA/ADAAA

Forbids age discrimination against people who are age 40+ in hiring, promoting, terminating

All employers with 20+ employees must comply

Age Discrimination in Employment Act

(ADEA)

American with Disabilities Act of 1990 (ADA) prohibits

discrimination and ensures equal opportunity for persons with

disabilities in employment

All employers with 15+ employees must comply

Requires “reasonable accommodation” if needed to perform

“essential functions” of a job.

ADA Amendments Act of 2008 (ADAA)

Major bodily function

Major life activities

ADA/ADAA

14

Reasonable Accommodations/Essential Functions

• Fundamental

• Consequence

• Limited

• Assignable

• Specialized

• Percentage of time

ADA/ADAAA

15

Making Reasonable Accommodations

Accommodations: “reasonable” and without “undue hardship”

This includes pre-employment testing parameters

Lowering performance standards is not a required accommodation

You do not have to hire unqualified persons

Maintain disability-related documentation separate from employee

personnel file

Each case must be considered separately

ADA/ADAAA

16

Civil Rights Act of 1964 (Title VII): Prohibits discrimination in

employment based on race, color, religion, sex, and national origin

Civil Rights Act of 1991

Reasonable Accommodation

Burden Shifting

Increased punitive damages for violations

Both 1964/1991 CRA cover non-federal employers with 15 or more

employees, employment agencies, and labor organizations

Violations can result in compensatory and punitive damages

1964/1991 Civil Rights Act(s)

17

Disparate Treatment: Defined

Plaintiff must show that applicants were

treated differently because of their race, sex,

gender, religion, age, or national origin

Involves some type of deliberate act(s) that

implies discriminatory intent

Plaintiff must show intent, from either direct

evidence or inferred from the circumstances

Theories of Discrimination

Requires Intent

Intent shown via direct or indirect “mosaic” of evidence

Disparate Treatment

18

Disparate Impact: Defined

A substantially different rate of selection

in hiring, promotion, or other

employment decision which works to the

disadvantage of members of a race, sex, or

ethnic group (Title VII of the Civil Rights

Act 1964)

Also to the disadvantage of members who

are those 40 or more years of age (Age

Discrimination in Employment Act of 1967)

Plaintiffs are not required to show intent

Requires No Intent

Facially-neutral employment practice, procedure, or test causes a disparity

Typically requires statistics to carry the initial burden

Disparate Impact

Theories of Discrimination

19

1964/1991 CRA: Disparate Impact (Defined)

An unlawful employment practice based on disparate impact is established only if:

2

and

the respondent fails to demonstrate that the challenged practice is job-related for the position in question and consistent with business necessity

3

or

the complaining party makes the demonstration described above with respect to an alternate employment practice, and the respondent refuses to adopt such alternative employment practice.

1 A complaining party demonstrates that a respondent uses a particular employment practice that causes an adverse impact


20

“or”

Diff. in Rates?

YES NO

Is the PPT

Valid?

YES NO

Alternative

Employment

Practice?

NO

Defendant Prevails

YES

Plaintiff Prevails

END

Plaintiff

Prevails

Practice,

Procedure,

Test (PPT)

Plaintiff

Burden

Defense

Burden

Plaintiff

Burden

Disparate Impact: How selection processes are challenged . . .


Males

Females

Does a practice, procedure or test (PPT) result in

disproportionate selection rates by gender, race/ethnicity,

or age group?

22

Important Note: “Intent” is not required. It doesn’t matter that recruiters or hiring managers may never see an applicants gender and/or race. All that matters is whether there is a selection rate disparity.

Plaintiff Burden: Identify if

Disparate Selection Rates Exist

Men

Pass (50)

Men

Fail (50)

Men Passing Rate

(50%)

Women

Pass (25)

Women

Fail (75)

Women Passing

Rate (25%)

• 2 X 2 Table Comparison

• Impact Ratio Analysis (IRA)

• Fisher Exact / Chi-Square / 80% Test

Results in a value

indicating if the

observed difference in

rates is due to chance

(i.e., statistically

significant).

Important note: Discrimination can impact any group. Make sure

to analyze men and individual minority subgroups as well. Compare

all groups to the “group with the highest rate.” Copyright © 2015 BCG, Inc. 23

Plaintiff Burden: Identify if Disparate Selection Rates Exist

Company

A

Company

C

Company

B

Company

D

0.343 0.168

0.088 0.048

So, given that “big

numbers are bad

numbers,” what

important lesson do

we need to take

from this?

PRIORITIZE

THE HIGH-

VOLUME

POSITIONS

FIRST!

Statistical Significance and Power

Male v. Female

Steps Starting Completing Result

Overall (App vs.

Hired)

Male - 100

Female - 100

Male - 50

Female - 30

2.81 SD

1. Basic

Qualifications

Male - 100

Female -100

Male – 79

Female - 77

0.25 SD

2. Test Male - 79

Female - 77

Male – 65

Female - 35

4.80 SD

3. Interview Male - 65

Female - 35

Male – 60

Female - 32

0.18 SD

4. Final Selection Male - 60

Female - 32

Male – 50

Female - 30

0.00 SD

Copyright © 2015 BCG, Inc. 25

Component “Step” Analyses

Before you start freaking out, we

have a tool!


www.biddle.com/adverseimpacttoolkit

http://www.biddle.com/adverseimpacttoolkit/

Plaintiff Burden: Identify if Disparate

Selection Rates Exist

No Significant Differences: • Plaintiff Burden

Not Met

• No Validation

Requirement

• OFCCP Audit Less

Likely to Get Ugly

Significant Differences: • Plaintiff Burden Met

(initially)

• Validation

Requirement

• Additional Data

Requests Likely

• OFCCP Audit More

Likely to Get Ugly


An Overview of Validity

Adverse Impact (i.e., significant difference in rates)

Sufficient Evidence of

Job Relatedness

/Validity

Disparate Impact

Discrimination


29

• Traditionally, validation is making sure a selection

practice, procedure, or test (PPT) appropriately measures

what it is designed to measure

• In a legal realm, a selection procedure is valid if it can be

proven by an employer that it is “…job related and

consistent with business necessity”

• It is the inferences regarding the specific uses of a test or

other measurement procedure that are validated, not the

test itself

What is Validity?

What Needs to be Validated?

• Any practice, procedure, or test (PPT) exhibiting

adverse impact

– Written tests

– Interviews

– Physical ability tests

– Resume screens

– Virtually any process that is used for making

employment-related decisions

Validation Standards

• When employers validate employment tests, four criteria are typically considered:

• Uniform Guidelines on Employee Selection Procedures (1978): EEOC, DOJ, CSB, DOL

• “SIOP Principles”: Principles for the Validation and Use of Personnel Selection Procedures (2003), published by Division 14 of the American Psychological Association (the Society for Industrial and Organizational Psychology, or SIOP)

• “Joint Standards”: Standards for Educational and Psychological Testing, published by: American Educational Research Association, American Psychological Association, and National Council on Measurement in Education

• Court Precedence

Griggs vs. Duke Power (1970) 401 U.S. 424

• Duke Power required a high school diploma for higher-

paid jobs with the company

• There was adverse impact against Black/African

Americans, but no apparent discriminatory intent

• Since the requirement of a high school diploma was not

directly related to the work being performed on the job,

the Supreme Court indicated Duke Power was in

violation of Title VII of the Civil Rights Act since the

employer had not validated the requirement

33

Validity Overview

• Content: A connection between the important parts of the job

and the test

– Requires demonstrating a connection between the job (using a job

analysis) and the content of the test

• Criterion: A mathematical study that proves the test predicts job

performance:

– It ALWAYS requires: A statistical study and results that are

“statistically significant” (<5% chance)

• Construct: A connection between a test, a trait, and job

performance:

– It ALWAYS requires “empirical evidence” connecting the test to the

trait and the trait to the job (all 3)

Content Validation

Content Validity Mechanics

• Content Validity:

– Jobs require that people have certain Knowledge,

Skills, Abilities and Personal Characteristics

(KSAPCs) to succeed

– KSAPCs that are measured must be required for

performing critical or important work behaviors that

constitute most of the job

– Create a test that measures a person on their

possession of those KSAPCs

Job Duties Operationally

defined KSAs

Other

KSAs

Selection Devices

(e.g., application form, tests,

Interviews, BQs)

37

Content Validation Process

Job Duties

Other

KSAs

Selection Devices

(e.g., application form, tests,

Interviews, BQs)

Content Valid!

38

Operationally defined KSAs

Content Validation Process

Criterion Validation

40

Selection

Device or

Test

Performance

or other

criteria

The strength of this relationship is

reported as a “Validity Coefficient”

Criterion Validity

Criterion should represent important work behaviors or outcomes. For example: Criteria could include

performance ratings, production rate, error rate, turnover/tenure, absenteeism, tardiness, disciplinary

actions, etc.

41

Criterion-Related Study

0

10

20

30

40

50

60

70

0 20 40 60 80 100

Test Score

Pe

rfo

rma

nc

e M

ea

su

re

Score on some “Criteria” (e.g.,

job performance, days missed

work, etc.)

Score on a

“Test”

42


0

10

20

30

40

50

60

70

0 20 40 60 80 100

Test Score

Pe

rfo

rma

nc

e M

ea

su

re

Test Score = 22

Performance = 31

Test Score = 85

Performance = 55

43


0

10

20

30

40

50

60

70

0 20 40 60 80 100

Test Score

Pe

rfo

rma

nc

e M

ea

su

re

44

Two Types of Criterion Studies

• Concurrent – Test is given to current employees

– Job performance data is collected from same employees

– Test scores correlated to job performance scores

• Predictive – Test is given to job applicants, but scores are not used for

selection purposes

– Job performance data is collected from those job applicants who are hired

– Test scores correlated to job performance scores

45

Interpreting Correlation Coefficients

+1.00

+0.50

0.00

-0.50

-1.00

r

The closer to +1.00 or -1.00 the stronger the relationship between the test and performance

The stronger the relationship between two variables, the better the ability to predict one if given the other

46

U.S. Department of Labor

Many courts have ruled that .30 is the minimum acceptable validity if there

is adverse impact against a protected group of test takers

What Types of Validation are

REALLY USED in Practice?

• Content (80%)

• Criterion (15%)

• Construct (5%)

• Why?

– Simplicity

– Defensibility

Identifying Legal Risks

The Top 5 Challenges We Typically

Find During Test Reviews

5 – “This test is so great, we use it for all of our jobs!”

4 - “What? This test has Adverse Impact?”

3 - “We use a 70% cutoff because it’s a C-”

2 - “But the job description says this skill is important…”

1 - “The test publisher said the test was ‘Valid’”

* for which positions?

* how recently?

Evaluation of Assessment Methods

Assessment Method Validity Adverse Impact

Cognitive ability tests High High (against minorities)

Job knowledge tests High High (against minorities)

Personality tests Low to moderate Low

Biographical data inventories Moderate Low to high for different types

Integrity tests Moderate to high Low

Structured interviews High Low

Physical fitness tests Moderate to high High (against females and older

workers)

Situational judgment tests Moderate Moderate (against minorities)

Work samples High Low

Assessment centers Moderate to high Low to moderate, depending on

exercise

Physical ability tests Moderate to high High (against females and older

workers)

US Federal Court Cases 1978-1997

Selection device Charges found not discriminatory

Frequencies Percentages

Unstructured interview 48/81 59%

Structured interviews 9/9 100%

Biographical data inventories 0/0 -

Cognitive ability tests 16/24 67%

Personality tests 0/0 -

Honesty tests 0/0 -

Physical ability tests 11/19 58%

Work sample tests 6/7 86%

Assessment centers 1/1 100%

Terpstra, D. E, Mohamed, A. A., & Kethley B. R. (1999). An Analysis of Federal Court Cases Involving Nine

Selection Devices. International Journal of Selection and Assessment, 7 (1), 30

Protecting Against Disparate Impact

Lawsuits

Validity Documentation

Document the Selection Process

Standardize PPT Use

Consider Face Validity

• Federal Uniform Guidelines on Employee Selection Procedures – www.uniformguidelines.com

• U. S. Department of Labor’s Testing and Assessment: An Employer's Guide to Good Practices – www.onetcenter.org/dl_files/empTestAsse.pdf

• Adverse Impact and Test Validation: A practitioner’s guide to valid and defensible employment testing – Author: Dan A. Biddle, PhD – Available at Amazon.com

53

Helpful Validation Resources

http://www.uniformguidelines.com/

http://www.onetcenter.org/dl_files/empTestAsse.pdf

QUESTIONS?

Protecting Against Disparate Impact

Lawsuits

Exploring alternate selection procedures

• When two or more selection procedures are equally as valid, you must choose the one with less adverse impact

• Does not mean the selection procedure with less adverse impact must be used

• You must show you at least explored alternative options

• The Three Primary Factors Are…

– Interview objectivity and job relatedness, such as:

o Objective and specified criteria

o Trained interviewers

o Validation evidence

– Standardized administration, including:

o Scoring guidelines being followed

o Minimal rater discretion

o Common questions across candidates

o Consistency

– Multiple Interviewers

o Implies a shared decision making process

o Increases rater reliability

Is There a Connection Between

Interview Type and Success in Court?

Interview Question

Danger Zone!

• Marital Circumstances

• Age

• Disabilities

• Gender & Physical Appearance

• Citizenship & National Origin

Use validation as your guide

-- BE CAREFUL OF “SMALL TALK” --

• Research…

– Study involving 84 disparate treatment and 46

disparate impact cases where interviews were

litigated

– 17 interview characteristics were evaluated (e.g.,

objective, subjective, standardized, etc.).

– Study resulted in clear findings that revealed the

three primary ingredients for successful interview

validity defense

Is There a Connection Between

Interview Process and Success in

Court?

Williamson, L. G., Campion, J. E., Malos, S. G., Rochling, M.V. & Campion, M. A. (1997).

Employment Interview on Trial: Linking Interview Structure with Litigation Outcomes.

Journal of Applied Psychology, 82 (6), 900-912.

Enforcement: Non-Compliance

ADA enforced by Equal Employment Opportunity Commission

(EEOC)

2009 Sears, Roebuck & Co $6.2 million for terminating instead of

accommodating persons with disabilities.

2006 UPS: $5.8 million for not hiring deaf applicants.

For more information about reasonable accommodations, visit the Job

Accommodation Network at www.askjan.org

ADA/ADAAA

59

http://askjan.org/

Under the ADAAA, “major life activities” is expanded to include

“major bodily functions.” The statute contains a non-exhaustive list of

“major life activities” that adds additional activities to those currently

listed in the ADA and Section 503 regulations, and a non-exhaustive list

of “major bodily functions.”

Major Life Activities include but are not limited to, caring for oneself, performing

manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending,

speaking, breathing, learning, reading, concentrating, thinking, communicating, and

working.

Major Bodily Functions include but are not limited to, functions of the immune

system, normal cell growth, digestive, bowel, bladder, neurological, brain,

respiratory, circulatory, endocrine, and reproductive functions.

Americans with Disabilities Act

Amendments Act (ADAAA)

60

4/5ths (80%) Rule is No Longer King

• Section 4D: Adverse impact and the "four-fifths rule."

• The courts and federal agencies now more typically focus on statistically significant differences in selection rates instead of relying on the four-fifths rule

• The number of standard deviations in differences in selection rates that a selection practice has appears to be a more straightforward interpretive tool than the 4/5ths rule

– The standard deviation that equates to the .05 level of statistical significance is 1.96

– Courts commonly refer to “two or three standard deviations” when establishing statistically significant adverse impact

• Statistical Significance: The point at which differences

become large enough that one can claim a trend exists

• Thresholds:

― 5%

― 0.05

― 1 chance in 20

― 2.0 Standard Deviations (actually 1.96)



Statistical Power

• Statistical Power: The ability to see those trends if, in

fact, they do exist

• Statistical power is directly related to effect size and

sample size:

― Effect size: The size of the difference in selection rates between two

groups . . . the larger the difference the fewer transactions necessary

to detect statistical significance

― Sample size: With larger numbers of transactions it becomes much

easier to detect statistical significance

• Enforcement agencies have no control over effect size (i.e.,

the difference in selection rates), but they do have some

control over sample size . . . which is why they often

request two (2) years worth of data or more to analyze.

• However, simply aggregating all applicants and all hires

across strata (as is typically done), can sometimes result in

incorrect/misleading findings.



Uniform Guidelines on Employee

Selection Procedures

• Given “great deference” by the courts – Griggs v. Duke Power Co., 401 U.S. 401 U.S. 424 (1971); Albemarle

Paper Co. V. Moody, 422 U.S. 405, 425 (1975)

– They have also been unilaterally adopted verbatim as a legal standard in several cases -- e.g., Brown v. Chicago (WL 354922, N.D. III, 1998).

• However, they do not have the force of law and some courts have ruled contrary to the Uniform Guidelines o E.g., 80% rule is no longer readily accepted by some courts as the threshold for

adverse impact

understanding the landscape of legal issues in employee...

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