understanding the landscape of legal issues in employee...
TRANSCRIPT
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)
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– C4™ (Contact Center Employee Testing)
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– AutoGOJA®
(Automated Guidelines Oriented Job Analysis®
)
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Contact Information
Jim Kuthy, Ph.D. Principal Consultant
(800) 999-0438 x 239
Chris Atkinson, M.S. Consultant
(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
Title VII, Civil Rights Act of 1964/1991
Religious Discrimination
Title VII, Civil Rights Act of 1964/1991
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
1964/1991 Civil Rights Act(s)
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 . . .
1964/1991 Civil Rights Act(s)
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!
Copyright © 2015 BCG, Inc. 26
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
Copyright © 2015 BCG, Inc. 27
An Overview of Validity
Adverse Impact (i.e., significant difference in rates)
Sufficient Evidence of
Job Relatedness
/Validity
Disparate Impact
Discrimination
1964/1991 Civil Rights Act(s)
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
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
Test Score = 22
Performance = 31
Test Score = 85
Performance = 55
43
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
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
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
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)
Copyright © 2015 BCG, Inc. 62
Statistical Significance and Power
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.
Copyright © 2015 BCG, Inc. 64
Statistical Significance and Power
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