Pre-Employment Tests Can Improve Hiring or Invite a Lawsuit

Employers use tests at nearly every stage of hiring. Typing tests, forklift evaluations, cognitive ability tests, personality questionnaires, situational judgment exercises and AI-driven assessments all promise to identify the best candidates faster. Used well, they can improve hiring decisions. Used carelessly, they can screen out qualified people and expose employers to discrimination claims.

The legal framework

The foundation is Title VII of the Civil Rights Act. In Griggs v. Duke Power Co., decided in 1971, the Supreme Court held that employment practices that are neutral on their face but disproportionately exclude a protected group can be unlawful unless the employer shows they are related to the job. That concept is known as disparate impact.

The Equal Employment Opportunity Commission's guidance on employment tests and selection procedures explains that tests must be job related and consistent with business necessity when they have a disparate impact. Even then, an employer can be liable if a less discriminatory alternative would serve its needs equally well.

The four-fifths rule

The Uniform Guidelines on Employee Selection Procedures, adopted by federal agencies in 1978, offer a practical rule of thumb. If the selection rate for any race, sex or ethnic group is less than four-fifths, or 80 percent, of the rate for the group with the highest rate, that difference is generally treated as evidence of adverse impact.

For example, if 60 percent of one group passes a test and only 40 percent of another group passes, the ratio is about 67 percent, below the four-fifths threshold. That does not automatically make the test unlawful, but it means the employer should be prepared to show the test is valid for the job.

What validation means

Validation is evidence that a test actually predicts job performance or measures skills the job requires. A forklift driving test for forklift operators has obvious content validity. A general personality test used to screen warehouse workers may not.

Research supports some methods more than others. A 2022 reanalysis by Paul Sackett and colleagues in the Journal of Applied Psychology found structured interviews had the highest average validity among common selection methods, with cognitive ability tests and job knowledge tests also showing meaningful validity. We cover that research in our structured interviews guide.

Vendors often claim their tests are validated. Ask for the validation study, whether it covered jobs similar to yours and whether adverse impact was examined. A study done for software engineers says little about a test used for nursing assistants.

Cutoff scores deserve their own review. A test may be valid while the passing score is set higher than the job requires, which increases adverse impact without improving hires. Setting cutoffs based on the level of skill needed for acceptable performance is easier to defend.

Disability and accommodations

The Americans with Disabilities Act requires employers to provide reasonable accommodations in testing for applicants with disabilities, such as extra time, an alternative format or a reader. Tests must measure the skills the job requires rather than reflecting an applicant's impairment, unless that impairment affects an essential function. Our guide to the ADA interactive process explains how accommodation requests should be handled.

Medical examinations and questions about disabilities are restricted before a conditional job offer. Some personality and psychological tests can cross that line if they are designed to identify mental health conditions.

AI tools follow the same rules

Automated screening and AI assessments are subject to the same anti-discrimination laws as traditional tests. Some states have added their own requirements, including notice and bias audits, as explained in our AI hiring law report. Employers generally remain responsible for the results even when a vendor designed the tool.

Practical safeguards

Start with a job analysis that identifies the skills and abilities the role requires. Choose tests that measure those directly. Monitor pass rates by group on a regular schedule, and again whenever a cutoff score or test version changes. If adverse impact appears, review whether the test is necessary, whether the cutoff score is too high and whether alternatives exist.

Keep records of the test used, the scores, cutoffs and hiring decisions. Federal rules require employers to retain selection records, and good records make it possible to spot problems early.

Testing can make hiring fairer by replacing gut instinct with consistent measures. That benefit holds only when the tests measure what matters for the job and are checked regularly for unintended effects.