by Eric Dunleavy, Ph.D., Senior Consultant, DCI Consulting Group
Earlier this month, OFCCP staff presented on a variety of EEO topics of interest to federal contractors at the National Industry Liaison Group (NILG) Conference. DCI staff attended an informative session from Dr. Richard Fischer, OFCCP Director of Testing Operations. The presentation was entitled ‘Enforcing Test Discrimination: Lessons Learned’, and there were a number of useful suggestions for navigating the landscape of employee selection in legally defensible ways.
One topic that caused some confusion concerned what types of employment processes fall into the category of ‘a test’ that can be challenged under an adverse impact theory of discrimination. Dr. Fischer’s handout defined a test as ‘any practice, method, procedure, process, device, etc. in any format (online, written, performance, etc.), used to assess candidates for a high stakes decision.’ This definition is generally consistent with the Uniform Guidelines on Employee Selection Procures (UGESP), which are the federal regulations on adverse impact measurement and methods for demonstrating that a selection procedure is job-related and legally defensible.
However, another handout noted that ‘Selection steps such as an employer reference check, medical or drug screening, criminal background check, credit check, verifying work history or investigation for a security clearance are not tests and need not be assessed for adverse impact.’
This language caused some confusion about what steps in a selection process could be challenged by the agency under an adverse impact theory. Although in many situations the processes listed above are implemented post job offer, they could still produce substantial adverse impact against protected groups and affect overall applicant-to-hire adverse impact results. Some companies may implement similar steps pre-offer.
Regardless, the status of credit checks and similar tools has important implications for federal contractor compliance. Obviously, if the selection steps above are not of interest to OFCCP, there would be no need to conduct step analyses on the consequences of these tools. Further, if the selection steps above are not of interest to OFCCP, it would be reasonable to remove applicants that are eliminated at those steps from the overall applicant-to-hire adverse impact analysis, as opposed to considering those applicants as rejected. Interestingly, the status of applicants who failed credit checks was an issue of contention in the recent Administrative Law Judge ruling in favor of OFCCP against Bank of America. That ALJ ruled that those applicants who failed a credit check should be included in the adverse impact analyses.
This decision to not assess the adverse impact or job-relatedness of credit checks and similar tools was a surprise to DCI staff, because it was our understanding that courts and enforcement agencies have treated these types of tools as selection procedures that can be challenged under the UGESP. In fact, EEOC released an informal letter on credit checks in March 2010, reiterating that credit checks can be challenged under adverse impact theory, often have adverse impact against minority applicants, and may not be job-related for many jobs. The adverse impact and job-relatedness of credit checks and other screening tools were also an agenda topic at a commission meeting in 2007.
To clarify the status of credit checks and similar tools in EEO analyses, DCI staff communicated with senior officials at DOL. DOL officials stated that this was a typo on the handout and confirmed that credit checks, drug screens, background investigations, and the other tools listed above may be considered selection procedures under UGESP, and may be challenged by OFCCP if they produce adverse impact against a protected group. Thus, it may be reasonable to include applicants who failed a credit check in the adverse impact analyses, and a step analysis is in the realm of possibility.
There were a number of useful takeaways from Dr. Fischer’s presentation, including the following:
- In the last 2 fiscal years, 44% of the tests reviewed by OFCCP experts were deemed discriminatory by the agency, either because there was no validity research, inadequate validity research, or because reasonable alternatives were available.
- The percentage of discriminatory tests has dropped since 2005
- In Fiscal Year 2009, 8% of OFCCP’s financial remedies collected in systemic discrimination cases came from testing cases.
- If an OFCCP audit focuses on a test that produces adverse impact, the agency does not need a copy of the test. Dr. Fischer was clear that the actual test is not useful for evaluating the validity of a test, and that the research showing the job-relatedness of the test is of primary interest to the agency.
- Interestingly, Dr. Fischer noted that there is no formal need for a bottom line adverse impact analysis to be statistically significant for the agency to focus on steps. Compliance officers may ask about steps in the selection process, and for selection step data, regardless of whether applicant-to-hire analyses show a statistically significant disparity. If any of those steps have impact, the contractor would be burdened with demonstrating job-relatedness.
- OFCCP experts have seen too much emphasis on face validity (i.e., that the test content looks like it is job related without any actual research) and not enough emphasis on actual validity research (evidence supporting that employers can make good inferences and decisions from tests).
- The Supreme Court ruling in Ricci v. Destefano has no direct implications for OFCCP enforcement, adverse impact analyses, the UGESP, or employment testing.