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Consider Preemployment Testing to Reduce Employee Lawsuits

Employees who sue their employers for discrimination, denial of workers’ compensation benefits, or unfair employment practices can harm a company, not only economically, but its reputation as an employer and a corporate citizen. One method being used more often by businesses to reduce employee lawsuits is preemployment testing. Implementing this process correctly can result in hiring employees who are not only best suited for the job, but by reducing employee lawsuits, you could lower the cost of your employment practices liability insurance.

Though preemployment testing has been proven effective in identifying individuals who are likely to file lawsuits, unfortunately, many employers fear they can be sued for just administering such tests. But, by vigilantly preparing and evaluating preemployment tests and conducting them uniformly, the practice can be a valuable, additional tool in selecting the right employees for your company.

Preemployment testing can include skills tests, endurance tests, physical agility tests, psychological tests, integrity tests, and educational proficiency exams. Employers with 15 or more employees are required by the federal government to monitor the impact of all tests – formal, informal, oral or written, objective or subjective – to insure that they do not negatively affect specific population groups.

Generally to be legally administered, preemployment tests must meet certain criteria. They must measure qualities and traits that have high relevancy to job performance; the content of a test must reflect the skills required to do the actual job; and if the test is designed to measure a certain trait or characteristic, determining the value of having such a trait must relate directly to job duties and performance.

Before developing preemployment tests or hiring a testing firm, you should determine if these tests are really necessary. If you find them necessary, you should meticulously document the reason you are conducting the preemployment test.  Keep thorough statistics to measure any adverse impact on specific populations, which could produce discrimination problems. Eliminate any test parts that are producing negative results.

Testing for disabled applicants demands that additional guidelines and restrictions be followed. Disabled applicants who have sensory, manual, or speaking disabilities must be administered tests that reflect their skills, aptitudes, and the factors required to do the job, and not their disabilities. Special arrangements must be made to test the disabled. Such arrangements may include providing a reader, sign interpreter, large print or Braille, giving the applicant more time to complete the test and making testing facilities easily accessible. Testing applicants for AIDS before and after a conditional job offer is not wise and could lead to serious legal difficulties, unless a genuine business requirement exists that would rule out a person with AIDS from performing the job.

According to a survey sponsored by the Chubb Group of Insurance Companies, 26% of executives at privately held companies reported an employee or former employee had sued their companies, and 22% reported having an employee file a discrimination or harassment complaint with the Equal Employment Opportunity Commission or other state agency during the past few years. Furthermore, 44% of executives said it is likely that an employee or former employee will sue their company in 2004, and 50% said it is likely that an employee will file a complaint with the Equal Employment Opportunity Commission this year. More than half the executives surveyed estimated it would cost more than $100,000 to settle an employment discrimination or harassment lawsuit. Ten percent said it would cost at least $1 million.

Conducting proper preemployment testing can not only reduce discrimination claims, but also help you hire productive staff, and decrease absenteeism and staff turnover.  If you have not already considered employment practices liability insurance, give us a call for more information about this important coverage.