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Target recently settled an ongoing disparate impact charge based upon the retail giant’s hiring tests, as reported in the Bloomberg BNA Daily Labor Report

Allegations

The Equal Employment Opportunity Commission (EEOC) charge alleged that the retailer’s tests used for hiring for managerial jobs discriminated against applicants on the basis of race, sex and disability, the agency announced on August 24.

Specifically, three tests used by Target had a disproportionate adverse impact on female and racial minority applicants and a separate psychological assessment was a pre-employment medical examination that violated the Americans with Disabilities Act (ADA), according to the EEOC.  Last, the EEOC alleged that Target also violated Title VII of the 1964 Civil Rights Act by failing to maintain records that were adequate to allow the agency to gauge the impact of the its hiring procedures.

Resolution

After a lengthy investigation, which commenced in 2006, and without the necessity of filing a lawsuit, Target and the EEOC entered into a three-year conciliation agreement, in which Target agreed to discontinue the use of the tests and to make changes to tracking its applicants.

Now, approximately 4,500 unsuccessful applicants will share in the $2.8 million settlement pool.  Other settlement requirements include: 
1. Target’s agreement to conduct a “predictive validity study” for all assessments it is currently using in hiring as well as those assessments it expects to use; 
2. Target’s agreement to monitor the effects of the assessments it uses for exempt-level professional positions for adverse impact based on race, ethnicity and gender; 
3. Target will provide the EEOC annually the results of its adverse impact analyses; and 
4. Target will annually provide training to relevant company personnel regarding the topics of record keeping, the ADA and pre-employment medical exams and disparate impact in employment        
     selection procedures.

Lessons Learned

For employers, this case highlights the need to re-verify the effects of any selection tests used and their potential disparate impact on any protected classifications.  As was and is the case in the EEOC’s probe and prosecution of companies using criminal background checks in rendering hiring decisions, the tests used need to be directly related to the essential functions of the position.  Further, even if related to the essential functions of the job, are such tests disproportionately impacting protected groups?  If so, employers would be wise to reassess and/or amend such tests to remedy the impact. 
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