Often Overlooked But Increasingly Adjudicated: Discriminatory Pre-Employment Testing, Selection Criteria and Advertising Leads to Litigation

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So far this year we’ve witnessed an inglorious trend of pre-employment discrimination. Examples of this unlawful pre-hiring include strength-based tests, advertising with preferences for younger workers, unlawful recruitment practices slanted toward a specific group, pre-employment inquiries about an individual’s disability and requests for photographs prior to the interview. California courts routinely evaluate pre-hiring practices by analyzing whether the policies and procedures were job-related, necessary for the operation of the business, or had a disproportionately negative impact (or adverse impact) on applicants of a particular race, color, religion, sex, age (over 40), or disability. The laws most often references are the Americans with Disabilities Act (ADA), Title VII of the Civil rights Act (Title VII), California’s Fair Employment and Housing Act (FEHA) and the Fair Credit Reporting Act (FCRA).

Recent Cases

Gordon Food Service, the largest food distributor in the United States, settled for over $2 million with over 1,000 female applicants when it discriminated against them in its hiring process. The discriminatory pre-hiring practice involved required the applicants to take a strength test even though it was not necessary for the job. The company hired just six women compared to 300 men over the same time period. As a consequence, women were denied good paying jobs. Surprisingly, the company settled charges of sex discrimination against its female job applicants for similar entry-level jobs in 2007 for $450,000.

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At the end of April, a California district court case exemplified how an erroneous pre-hire background check can lead to litigation. One of the nation’s largest retailers Sears revoked a job offer allegedly violating the FCRA when it did not provide the mandatory pre-adverse action notice to the candidate. The adverse notice, with a copy of the consumer report that it relied upon, must be provided to the consumer prior to the adverse action so that the consumer has an opportunity to contest the report’s contents.

A case against Target required the second largest U.S. discount retailer (behind Walmart) to settle for $2.8 million as result of pre-employment discriminatory hiring tests in violation of the ADA. The illegal tests disproportionately screened Black, Asian and female applicants without a legitimate business necessity or related to the job. Also, Target violated the ADA in that it had psychologists render interview summaries before making a job offer.

Like many other age-discrimination lawsuits against technology companies in California (especially Silicon Valley), a case was filed by a certified public accountant against the internationally renowned accounting firm Price Water house Coopers. Similar to Facebook and IBM, PWC allegedly had pre-designated age groups (20s) for its hires leaving thousands of capable older workers out while aiming to maintain a younger workforce, both for appearance and to lower compensation requirements. Facebook settled claims that it violated the ADA and FEHA by posting advertisements seeking recent college graduates while IBM was found to lay off a portion of its employees over 40 only to then re-hire new graduates. Claims are pending against Google and Twitter.

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Applicable Laws

Under federal and state laws, it is illegal for companies to discriminate against job applicants because of their membership in a protected group. Also, a potential employer may not base hiring decisions on stereotypes and assumptions about protected persons.

ADA discrimination protection begins in the application phase, where an employer with at least 15 employees cannot discriminate against a qualified applicant. One of the law’s primary protections is the requirement of employers to provide “reasonable accommodation” where they must alter the way that pre-employment testing is rendered. The only way that employers would not be required to provide this accommodation is if it results in “undue hardship” to the employer, such as extremely problematic or costly.

FEHA also protects applicants against discrimination, harassment and retaliation. However, FEHA is more expansive than ADA in that it covers employers who employ five or more employees. Recent updates to the law make it easier to meet this requirement. Also, FEHA prohibits discrimination against anyone who participates in a lawful or protected activity, files a complaint against a company breaking a rule, or testifies or assists in proceedings under FEHA. An individual may recover unlimited monetary damages, including back pay, emotional distress, punitive damages and other out-of-pocket losses. Complaints must first be filed with the Department of Fair Employment and Housing within one year from the date of the alleged unlawful act. They may then be filed in court.

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Therefore, if a potential employer requires job applicants to take a test, the test must be necessary and related to the job, and the employer may not exclude people in a protected group. Although seemingly rudimentary, employers keep illegally subjecting applicants to discriminatory selection without realizing its adverse impact. As a result, companies face stiff penalties and lawsuits when they run afoul of state and federal laws promulgated to protect California’s workers. Stephen Danz

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