On July 19th, the Department of Labor announced a discrimination-suit settlement that sent a clear message to employers across the country: If you are going to use testing in the hiring process, you'd better know what you're doing or it will cost you.
Leprino Foods, a Denver-based cheese and dairy producer, agreed to pay $550,000 in back pay and lost benefits (to those it didn't hire) to settle DOL's allegations that the company created artificial barriers for minority job applicants through its use of pre-employment testing.
The initial dispute involved the company's practice of using ability tests to assess candidates' skills in applied mathematics, locating information and observation when hiring laborers. More specifically, the DOL alleged that Leprino Foods' use of WorkKeys -- an employee-skills assessment-testing system -- in its application process had an adverse impact on minority job applicants because it tested applicants' skills in math and observation, skills unrelated to laborer jobs. Apart from the fine, Leprino agreed to ultimately employ 13 of the original applicants.
"This case illustrates a dilemma in hiring practices facing many organizations," says Christine Riordan, dean and a professor of management at the Daniels College of Business at the University of Denver. "And, it will only increase as the demographic and ethnic populations of the labor pool change." The dilemma, she says, is that, while leading psychologists have shown that ability tests (usually written) are exceptional predictors of job performance, use of these tests typically results in adverse impact -- meaning employers using these tests are less likely to hire non-Caucasians.
Robert Gatewood, professor emeritus at the University of Georgia and author of Human Resource Selection, 7th Edition, says organizations can be opening themselves up to lawsuits and cutting themselves off from major parts of the labor pool that are becoming increasingly larger.
"The paradox these tests pose ... has generated debate among organizational and HR professionals," Gatewood says. "Even though court cases have upheld the use of ability tests with a clear relationship to job activities, some professionals have deep reservations about their use because of their impact on society."
Of course, employers also should consider the benefits of having a highly diverse workforce, Riordan notes.