The OFCCP (Office of Federal Contract Compliance Programs ) announced it has settled its allegations with M.C. Dean Inc. that the company engaged in hiring discrimination against minorities due to the use of an allegedly invalid pre-employment test.  The Company settled for $875,000 that will be paid to nearly 400 minority applicants and must make 39 job offers as part of the settlement.

This settlement provides (at least) two lessons to all federal contractors.  First, the OFCCP is digging deeper than just the overall applicant-to-hire adverse impact analyses.  Where there is overall applicant-to-hire adverse impact in the hiring process, the Agency will analyze each stage (screen, test, interview, offer, etc.) in the hiring processes for adverse impact.  Second, where there is adverse impact at the testing stage, employers must evaluate the validity of their “tests.”  In these cases, OFCCP will request and send the validation materials to its Industrial-Organization Psychologist for review, so it must be able to withstand scrutiny, including whether the test has been (i) validated recently, (ii) validated for the employer’s specific position, and (iii) that there are not less discriminatory methods for achieving the same predictive results of job performance.  In particular, employers who are using employment tests that have never been validated, have not been validated for the specific position for which they are being used, have not been validated for their specific company, have not been reviewed by someone other than the testing vendor who created the test, or have not been revalidated as the position changed over time may not realize they may be “at risk” in these audits.

In short, own each step of your hiring process – even if a third-party testing vendor created and/or administers your test, the employer will be held accountable if the test causes adverse impact and is not properly validated.  Employers need to get in front of these testing issues by analyzing the test’s potential adverse impact and existing validation to minimize exposure during audits.  Notably, this has also become a “hot button” for EEOC, so taking a close look at your tests can help minimize exposure to both OFCCP and EEOC claims.