Talent Selection and Management Under Scrutiny

Minnesota SHRM 2012 State ConferenceMark J. Girouard, JD

Nilan Johnson Lewis PA120 South Sixth Street, Suite 400

Minneapolis, MN 55402mgirouard@nilanjohnson.com

www.nilanjohnson.com

Brandon Sullivan, Ph.D.Corporate Psychologists, LLC

5500 Wayzata Boulevard, Suite 1070Golden Valley, MN

sullivan@corporatepsychologists.comwww.corporatepsychologists.com

The Value of Assessment Provides the most relevant and predictive data

- More predictive than traditional interviews- Especially helpful when lacking reliable data about

past performance (e.g., external candidates)- Best way to evaluate candidates for new roles where

past performance is not an accurate guide Drives increased job performance, productivity and

retention- Leadership roles- Pivotal / critical roles- High volume jobs

Talent Selection and Management

Historically, focus was on formal assessments Trend is toward a broader focus

- Evaluations of potential and promotability- Succession and talent planning decisions- Other procedures that impact career opportunities

(e.g., internal interviews) Also consider applicant tracking systems

- Built-in assessments and competencies- Quality and relevance of data- Policies for use in talent decisions

Risk Management The EEOC and private plaintiffs’ attorneys are

increasingly focusing on pre-employment/hiring criteria and other “systemic” issues

Increasing scrutiny of- Pre-employment assessments- Pre-offer “medical” examinations- Background checks

Arrest records Conviction records

- Education requirements

Dukes v. Wal-Mart The U.S. Supreme Court reversed certification of

nationwide pay-equity class of 1.5 million female employees- Court concluded that involvement of different

decision-makers precluded necessary finding of commonality

- Court acknowledged two circumstances where a nationwide class action may still be viable Biased testing or hiring procedure General policy of discrimination

Title VII of the Civil Rights Act Title VII makes it unlawful for employers to base

decisions on an applicant’s or employee’s race, color, religion, gender, or national origin- This prohibition extends to decisions based on

facially neutral employment policies or practices that have a disparate (or adverse) impact on protected class members

- An employer may defend against a disparate impact claim by showing that its policy or practice is job-related to the position and consistent with business necessity

The EEOC’s Uniform Guidelines on Employee Selection Procedures

The EEOC’s “Uniform Guidelines” require employers to collect and maintain information about differences in their selection tools’ impact based on race and gender- If adverse impact is found, employers must be able to

establish that their tools are job-relevant- Employers must also be able to show that they

considered whether other, alternative selection practices with less adverse impact might also be equally valid

Reducing Risk and Maximizing ROI

Two primary goals- Assess job-relevant characteristics- Make unbiased talent decisions

Three tools needed to achieve these goals- Job Analysis: What is required for success?- Validation: Does the process predict success?- Adverse Impact Monitoring: Is there bias?

Job Analysis

What is it?- Identifies important skills, knowledge, abilities, and

other factors needed for success Why do it?

- So you know what to look for in job candidates- The starting point in developing talent management

tools

Job Analysis What does it look like?

- High volume positions: interviews, focus groups, surveys, quantitative analysis

- Low volume positions: interviews, qualitative analysis

- Describes the important factors needed in each job- Process is consistent and gathers data from SMEs- Proactive documentation is critical- HR can often provide SME insights on a wide range

of jobs

Validation

What is it?- Demonstrates that a talent management practice is

related to success in a given job Why do it?

- Tells you how well a given process is working- Provides guidance for improving and enhancing

talent practices- A key component for reducing legal risk

Validation What does it look like?

- Job analysis is typically the first step - Need a good measure of job success- Process related to job success (criterion validity)- Content aligned with key success factors (content

validity)- Use criterion validity for high volume positions- Low volume positions may only allow content

validation- Trends: transportability and synthetic validity

Adverse Impact Analysis What is it?

- Measures bias in talent decisions based on race, sex, or ethnic group

Why do it?- Protect employment brand- Know if / where there is bias

Adverse Impact Analysis

What does it look like?- 4/5ths rule - 2 standard deviation rule - Regular monitoring- Look at components of a process as well as final

decisions

ROI of Talent Management The ROI of talent practices depends entirely on

their ability to predict job success Job analysis and validation methods designed by

experts in Industrial-Organizational Psychology are the best way to maximize predictiveness

A well-designed selection process can elevate job performance, increase productivity, and reduce unwanted turnover

Combined with adverse impact monitoring, such a process can also protect and enhance your employment brand and reduce legal risk

The Guidelines and Vendors

The Uniform Guidelines apply even when a selection process is administered by an employment agency or consultant on behalf of the employer

Even when a selection process is administered by an outside entity, the employer is expected to maintain adverse impact data and, where the process is shown to have adverse impact, to analyze information about:- The impact of component selection procedures- The validity of any component having disparate impact

Questions to Ask Vendors How would you approach job analysis? How would you ensure the assessment is aligned with the

results of the job analysis? What would you recommend for validating the

assessment? What do you provide for adverse impact analysis? What do you recommend if adverse impact is found? Is job analysis, validation, and adverse impact monitoring

included in your pricing? If not, what would that cost? What warranties do you provide for your assessments? Will you indemnify us against claims arising from use of

your assessments?

The Americans with Disabilities Act

The Americans with Disabilities Act (“ADA”) prohibits employers from requiring applicants to submit to a “medical examination” prior to receiving a job offer

The EEOC defines a “medical examination” as “a procedure or test that seeks information about an individual’s physical or mental impairments or health”

The ADA EEOC guidance lists the following factors for determining

whether a test or procedure is a medical examination:- whether the test is administered by a health care professional- whether the test is interpreted by a health care professional- whether the test is designed to reveal an impairment or

physical or mental health- whether the employer is trying to determine the applicant’s

physical or mental health or impairments- whether the test is invasive- whether the test measures an applicant’s performance of a

task or measures his/her physiological responses to performing the tasks

- whether the test normally is given in a medical setting (for example, a health care professional’s office)

- whether medical equipment is used

The ADA Medical examinations include psychological tests

“that are designed to identify a mental disorder or impairment,” such as “those listed in the American Psychiatric Association’s most recent Diagnostic and Statistical Manual of Mental Disorders (DSM)”

Psychological tests that measure “personality traits” such as “honesty, preferences, and habits” are not considered medical examinations

The ADA

In applying the ADA, courts have tended to focus on the following considerations:- whether a test is administered or interpreted by a

health care professional - whether a test is designed to reveal an impairment

or the applicant’s mental health - Whether a test measures personality attributes and

behaviors that are neither disabilities nor characteristics likely to identify an impairment

The ADAKarraker v. Rent-A-Center, 411 F.3d 831 (7th Cir. 2005) Rent-a-Center used a battery of tests that included the

Minnesota Multiphasic Personality Inventory (“MMPI”) to assess internal and external candidates for management positions- The court cited all of the EEOC Guidance factors, but

concluded that the question whether the MMPI was a medical examination “largely turn[ed] on whether [it] is designed to reveal a mental impairment”

- Because the MMPI was originally designed to “reveal mental illness,” the court concluded that it was “best categorized as a medical examination”

The ADAThompson v. Borg-Warner Protective Servs. Corp., 996 WL 16290 (N.D. Cal. Mar. 11, 1996) Test for security guards that measured trustworthiness, work

ethic, and attitudes toward drinking and drug use was not a pre-offer medical examination- The test was not administered or interpreted by a health care

professional and was not designed or used to reveal a mental health “impairment”

- The test elicited information about personality attributes such as “behavior problems” and “emotional instability”

- There was no evidence that these attributes were “themselves disabilities or [] characteristics that can lead to identifying whether an applicant has an impairment, whether defined by the DSM or some other parameter”

The ADA

Questions About Drug Use: Past addiction to illegal drugs or controlled

substances is a covered disability under the ADA, but past casual use or current use of illegal drugs are not covered disabilities- Permissible Questions. Employers may ask

applicants questions about prior drug use, provided that the question is not likely to elicit information about past drug addiction

- Impermissible Questions. Questions that ask how much or how often the applicant used drugs in the past are more likely to elicit information about whether the applicant was a past drug addict. Such questions are usually impermissible at the pre-offer stage

The ADA

Questions About Alcohol Use:

Alcoholism is also a covered disability under the ADA- An employer may ask applicants about whether they

drink- An employer may not ask questions that are likely to

elicit information about alcoholism, or a history of past alcoholism, such as how much or how frequently the applicant drinks

Related Minnesota State Law IssueLawful Off-Duty Conduct

Minnesota law prohibits employers from “refus[ing] to hire a job applicant or discipline[ing] or discharge[ing] an employee because the applicant or employee engages in or has engaged in the use or enjoyment of lawful consumable products, if the use or enjoyment takes place off the premises of the employer during nonworking hours”- Questions on an assessment that ask about applicants’

use of alcohol, which under Minnesota law is within the definition of “lawful consumable products,” may be impermissible, depending on how much weight the answers carry in the hiring decision

Other Pre-Employment Selection Risks Arrest records

- EEOC routinely asserts this claim, and frequently prevails

- Numerous states (not MN) prohibit use of arrest records

Conviction records - EEOC expects employers to individually consider

Nature and gravity of crime Amount of time that has passed Nature of the job sought

Other Pre-Employment Selection Risks

Educational requirements- Ensure that education requirements are job-related

and necessary- High school diploma requirements likely subject to

challenges under Title VII and ADA

Questions?