Using SAT scores in hiring may subject employers to liability

The Wall Street Journal reported today on the growing trend of using SAT and ACT scores in hiring decisions, even decades after applicants graduated from high school.  The article reports that “consulting firms such as Bain & Co. and McKinsey & Co. and banks like Goldman Sachs Group Inc. ask new college recruits for their scores, while other companies request them even for senior sales and management hires, eliciting scores from job candidates in their 40s and 50s.”

The article does not address the legal ramifications for employers, who may not have considered their potential liability for creating a disparate impact upon minority applicants.   The EEOC’s Fact Sheet on Employment Testing explains how tests used in hiring can create a disparate impact– that is, disproportionately excluding candidates based on protected categories such as race and sex if the tests are not “job-related and consistent with business necessity.”  Even if the latter standard is met, a candidate could argue that there is a less discriminatory alternative available that will not disparately impact minorities and/or women.

The WSJ article reports that some clients are screening for candidates who score in the 95th percentile on the math portion of the SAT.  This might be permissible for jobs involving math, but for jobs that do not, there is almost certainly a less discriminatory screening alternative.  Applicants desiring to challenge the practice will not have to look far for statistics on the discriminatory impact of the SAT and ACT.   The WSJ gives recent statistics on the racial disparity of SAT results: “In 2013, SAT test-takers in the ‘Black or African-American’ category scored an average 431 on the exam’s critical reading section, 429 on math and 418 on writing. White test-takers, meanwhile, scored nearly 100 points higher on average in every section.”  One employer using  the SAT is quoted in the article as stating that knowing that the SAT is a standardized test was enough for his company to feel comfortable using it.  This, however, is not legally sufficient.

The court approved settlement in EEOC v. Ford Motor Co. illustrates how high liability could be for an employer who uses a cognitive test with a disparate impact when a less discriminatory selection process is available.  Here is the EEOC’s blurb on the settlement:

EEOC v. Ford Motor Co. and United Automobile Workers of America involved a court-approved settlement agreement on behalf of a nationwide class of African Americans who were rejected for an apprenticeship program after taking a cognitive test known as the Apprenticeship Training Selection System (ATSS). The ATSS was a written cognitive test that measured verbal, numerical, and spatial reasoning in order to evaluate mechanical aptitude. Although it had been validated in 1991, the ATSS continued to have a statistically significant disparate impact by excluding African American applicants. Less discriminatory selection procedures were subsequently developed that would have served Ford’s needs, but Ford did not modify its procedures. In the settlement agreement, Ford agreed to replace the ATSS with a selection procedure, to be designed by a jointly-selected industrial psychologist, that would predict job success and reduce adverse impact. Additionally, Ford paid $8.55 million in monetary relief.

While SAT scores may appear to make sorting applicants easier, most employers would rather avoid such liability, and I believe most employers are trying to diversify their workforces.  Employers may also wish to consider some other limitations of SAT scores.  SAT tutors will tell you that there are many tricks to taking the test and that practice can increase scores by 100+ points.  Thus students with the resources for tutoring and intensive preparation courses are at an advantage.  Society may sanction this for college admissions, knowing that administrators are looking for socioeconomic and racial diversity in their incoming class and thus are considering other factors as well.  Is it right for applicants to continue to be judged on one test from high school into their 40s or 50s?  What if the applicant did not take test prep courses or did not consider the SAT important at that time?  Should the applicant retake the SAT now?

Employers are well advised to drop college aptitude tests from their hiring decisions and to look toward more recent and job-related criteria.  I would never advise an employer to use a test that has already been shown to create a disparate impact based on race.