Court Ruling That Employer’s Integrity Test Violated ADA Could Open Door to Litigation

By Matthew Heller

Sep. 1, 2005

Since the use of polygraphs in most employment settings was outlawed in 1988, employers have been flocking to integrity or honesty testing as the best way to get behind a prospective employee’s résumé. As many as 5 million tests are given a year, and the testing industry, which has been growing about 20 percent a year, offers a dizzying array of products for employers to choose from. For as little as $25 a test, employers may just be able to catch a thief.

    Given how common it is–and how intrusive it can be–such testing has generated surprisingly few lawsuits. One recent survey found fewer than a dozen such claims against private employers. The benefits of testing, including the potential for greater employee productivity and the reduction of high termination costs, appear to greatly outweigh the risk of potential litigation.

    But all may not be that quiet much longer on the legal front. In June, the 7th U.S. Circuit Court of Appeals in Chicago ruled in a class-action case that a furniture-rental company violated the Americans With Disabilities Act by requiring applicants for promotions to take the Minnesota Multiphasic Personality Inventory, the most popular screening test used by U.S. employers. Rent-A-Center’s use of the test “likely had the effect of excluding employees with (mental) disorders from promotions,” a three-judge panel said.

    It was the first time that a federal appeals court addressed the legality of testing. According to John Canoni, an employment lawyer at the New York firm of Nixon Peabody, the decision in Karraker v. Rent-A-Center is so broad that it could apply to other widely used tests. “It leaves things wide open,” he says.

    Just a week after the 7th Circuit ruled, moreover, a Louisiana woman filed suit against the state police alleging that she suffered sex discrimination as a result of taking the MMPI and other tests to qualify for a job as a state trooper. The tests produced “a result that is arbitrary and without rational basis,” claims Jeannine Cruz, who is seeking more than $750,000 in damages and attorney fees.

    With the pro-plaintiff Karraker precedent now on the books–and tests becoming more widely available, particularly via the Internet–employment lawyers and hiring consultants believe that more litigation is likely. And that means employers should be even more vigilant about avoiding pitfalls and making their testing systems legally defensible.

    “You have got to make sure (the test) relates to the requirements of the job,” observes John Scott, vice president of Applied Psychological Techniques, a human resources consulting firm in Darien, Connecticut.

Overt vs. covert tests
    In a 2003 survey, Management Recruiters International found that 30 percent of American companies, ranging from tiny independents to behemoths like Wal-Mart and General Motors, use personality tests to screen job applicants. Specific numbers on integrity tests are hard to come by–20 percent of the members of the Society for Human Resource Management have said they use them–and there’s also some confusion over how to differentiate them from other employee assessment tests.

    The questions on “overt” integrity tests relate directly to honesty. They might ask whether the applicant has stolen merchandise or property from previous employers, for example. “Covert” integrity tests venture into general psychological characteristics and are sometimes called personality-based tests. An applicant might be asked to describe how the phrase “I feel lonely when I am with other people” fits their personality or whether they “see things or animals or people around me that others do not see.”

“A lot of times, I think companies
see testing as the Holy Grail of decision-making.”
–Stephen Paskoff, president of Employment Learning Innovations

    The MMPI, first developed using hospital patients and consisting of more than 500 multiple-choice questions, is most commonly used by psychologists to diagnose severe mental abnormalities.

    “It was not even designed as a workplace integrity testing tool,” says Joseph Schmitt, an employment lawyer at the Minneapolis firm of Halleland, Lewis, Nilan & Johnson. The ADA limits employers’ use of “medical examinations,” which the EEOC defines as any “procedure or test that seeks information about an individual’s physical or mental impairments or health.” Nevertheless, employers from retailers to law enforcement agencies have adopted the MMPI as a covert integrity test. One researcher has found that 60 percent of police departments use it.

Legal background
    The first testing case to reach an appeals court involved applicants for security guard jobs at Target department stores who objected to the company’s “Psychscreen” test, a combination of the MMPI and the California Personality Inventory. The California Court of Appeals ruled in 1991 that the test’s questions about religious beliefs and sexual orientation violated the plaintiffs’ privacy rights. “Target made no showing that a person’s religious beliefs or sexual orientation have any bearing … on the ability to perform (a security guard’s) job responsibilities,” the opinion said.

    In 1996, a test that, among other things, measures trustworthiness withstood ADA claims brought in a class action against Borg-Warner Protective Services, the nation’s largest security guard company. A federal judge said the test was not a medical examination under the discrimination law, but Borg-Warner settled separate California Labor Code claims for $2.1 million.

    The Target and Borg-Warner cases suggested how employers could go too far with testing. But neither is as far-reaching, legal experts say, as the recent 7th Circuit decision. The “sweeping nature of this ruling and its potential impact on common and widely used psychological tests mandate employers’ immediate attention,” Canoni wrote in his firm’s newsletter.

    The plaintiffs in the Karraker case were three brothers working for Rent-A-Center stores in Illinois. One was seeking promotion from his entry-level job, the others to middle-management positions, but all of them failed a battery of nine tests, including the MMPI. A trial court judge dismissed the brothers’ ADA claims on summary judgment, saying that the way Rent-A-Center scored the MMPI showed it used the test “solely for the purposes of discerning personality traits.”

    But the 7th Circuit declared that the MMPI is a medical examination. No matter how the test is scored, the court said, it was “designed, at least in part, to reveal mental illness and has the effect of hurting the employment prospects of one with a mental disability.”

    “Just by looking at the questions, they concluded … the design of this test is bad” for employment-screening purposes, Canoni says. As a result, “the question now for employers is, are there tests out there that are similar” to the MMPI in their design? “If a test is similar, that raises concerns under the ADA,” he says.

    In 1978, the Equal Employment Opportunity Commission issued its Uniform Guidelines on Employee Selection Procedures, which indicated that the key to avoiding problems with a test was to ensure that it was job-related. An employer, the guidelines say, can use “construct” validity studies as evidence that a specific test actually does measure the personality traits identified as important to performance of a specific job. Many hiring consultants now also recommend “concurrent” validation–that is, measuring how the test correlates with on-the-job performance in the workforce. If the test is valid, the scores of current employees should match up with their performance ratings.

    “You have to use tests in a system,” explains Chris Klinvex, executive vice president of Select International, a Pittsburgh-based testing firm. “A test by itself will not give you what you want.”

    Under the Karraker decision, even the MMPI could still be defensible if its use is job-related. Rent-A-Center did not raise that defense, which may be understandable given the nature of its employees’ duties.

    “I don’t know why you need to be tested for the most severe psychiatric abnormalities if you’re just working up an order for a TV set,” says the Karrakers’ attorney, Mary Lee Leahy, who practices in Springfield, Illinois.

Gender bias
    In the case of Jeannine Cruz, the Louisiana State Police offered her a trooper job conditional on her passing three tests–the MMPI, the Shipley Institute of Living Scale and a test she has yet to identify. Recruiters rescinded their offer after the test scores allegedly predicted she was at risk for, among other things, sexual misconduct and chemical dependency. Cruz, who already works as an officer for a municipal police department, claims there was “absolutely nothing” in her employment history or background to support such a prediction.

    “She was devastated,” says her attorney, Douglas Brown of Hammond, Louisiana. “She doubted herself for months.”

    The suit does not dispute that the tests are job-related; instead, it alleges they have an adverse impact on women because women “fail the ‘tests’ at a statistically significant higher rate than males.” At least one of the tests other than the MMPI is “inherently biased” in favor of men as the passing scores were based on a sample that is almost exclusively male, Cruz alleges.

    According to the EEOC guidelines, employers can avoid adverse-impact claims if the pass rate for any race, sex or ethnic group is no less than 80 percent of the rate of the highest-passing group. Brown says that he’ll be able to prove that the test unfairly discriminates against women.

    Of course, doing validation studies and calibrating pass rates increases costs. Some employers, dazzled by the trendiness of integrity testing and the sales pitches of test vendors, may be tempted to go for the cheap fix, experts say. “A lot of times, I think companies see testing as the Holy Grail of decision-making,” suggests Stephen Paskoff, president of Employment Learning Innovations, an Atlanta company that assists companies in developing “lawful and productive” workplace behaviors.

    “I don’t believe this should be done on the cheap,” attorney Schmitt says. “You won’t realize the benefits unless you do it appropriately.”

    And you may not keep those plaintiffs’ lawyers at bay, either.

Workforce Management, September 2005, pp. 74-77Subscribe Now!

Matthew Heller is a freelance writer and editor based in Los Angeles.

Schedule, engage, and pay your staff in one system with