Résumé-Screening software: legal risks and precautions

The federal job anti-discrimination law (Title VII of the Civil Rights Act) prohibits two types of discrimination:

• Disparate treatment: employer actions that directly discriminate against an employee or applicant based on the person’s age, race, gender, religion, national origin or disability status.
• Disparate impact: employer actions that appear to be neutral but have an unequal (or disparate) impact on a "protected" group of employees.

Because automated tests, such as résumé-screening programs, are blind to applicants’ race, religion, gender and national origin, they likely can’t create a disparate-treatment case.

However, such programs can still have a disparate impact on minorities. Plus, the U.S. Supreme Court ruled last year that people can also file disparate-impact lawsuits in age-discrimination cases. (Smith v. City of Jackson)

The ADA also prohibits employers from conducting medical tests prior to making a conditional job offer. Some pre-employment personality tests could meet the ADA’s definition of a "medical test" if they too closely resemble psychological diagnostic tests. (See box below.)

What’s new

With an ever-increasing number of résumés submitted online, employers are often overwhelmed with applicants. To sift through the mountain, some employers turn to electronic résumé-screening services. Those services help weed out applicants because they appear to lack qualifications.

But this convenient shortcut can create hidden liability. If the screening results show a disproportionately negative impact on minority applicants or applicants over age 40, your organization (not the screening service) could be liable under Title VII.

How to comply

Employers can typically prevent disparate-impact lawsuits by monitoring the results of any pre-employment test.

The Equal Employment Opportunity Commission (EEOC) suggests that employers use the "80 percent" rule. In other words, if minority pass rates for a test are less than 80 percent of the rate for majority applicants, the test has a disparate impact on minorities.

Remember, however, that this is a general rule of thumb, not a government regulation.

Federal law also allows employee/plaintiffs to present statistical evidence showing disparate impact. Sophisticated statistical tests can determine whether the two groups (majority and minority) are being affected the same way by the test.

Key point: Its best to use pre-hire tests that show no disparate impact. But just because a test does have a discriminatory impact on minorities, that doesn’t mean it’s automatically illegal. Employers can avoid liability in such cases by showing the test serves a legitimate business purpose.

To do this, you must structure it to test how applicants will respond to real conditions on the job. One court ruling said the cutoff score on entry-level tests must be the lowest necessary to do the job … and no higher. (Lanning v. SEPTA, 3rd Circuit, 2002)

Accommodating disabled applicants. If applicants are disabled, you must allow them reasonable accommodations to perform any pre-employment tests.

Employers must enter into an interactive process to arrive at a reasonable accommodation. You don’t have to agree to the accommodation requested by the applicant; the employer ultimately decides what is "reasonable."

Keep all supporting documentation of your accommodation decision, showing exact costs or any other reasons why the employer deemed the accommodation unreasonable.  

Is your pre-Hire test an illegal ‘Medical exam’?