EEOC Holds Public Meeting, Fans Go Crazy

Someone on the IPMAAC listserv noted that the Equal Employment Opportunity Commission (EEOC) recently had a public meeting where they invited people to listen to presentations from experts on “emerging trends in workplace testing and selection procedures.” These included some of the EEOC attorneys, those affected by recent cases, and other huge brains in the organizational psychology world. Too bad it was in Washington, D.C.; I’d have love to have gone.

One person who did go, however, was kind enough to write up a summary and post it to the IPMAAC list. That summary can be found by performing clicking motions here. It sounds like there were various retrospectives and case studies (literally) involving recent claims with which the EEOC threw its considerable weight. Some of the more interesting parts of the discussion involved companies getting in trouble when they didn’t follow through on the Uniform Guidelines’ recommendation to search for alternative predictors with lower adverse impact. I think this bit of the document usually gets ignored, since a lot of people think that “Eh, that’s just in there to sound good,” or “Nobody really does that.” Well, apparently they do.

I also found this part on the use of credit scores for selection interesting:

Adam Klein brought up the problem of employers using credit
scores to make selection decisions. Employers like using credit scores
because the info is cheap and easy to obtain. However, there are
several problems with using credit scores: credit scores were developed
for use in credit decisions, not employment decisions; there are several
valid reasons why someone would have no credit score at all; and there
are no studies showing a correlation between credit scores and job
performance. Klein notes that the adverse impact involving credit
scores is 2:1. Klein suggested that the EEOC issue guidance on the use
of credit scores in making employment decisions.

It still surprises me every time someone mentions seriously using credit reports as a selection tool. I always countner by asking exactly what they think they’re measuring with that, and the retort is usually something along the lines of “Well, how can we expect them to manage our company’s assets if they can’t manage their own?” This is a hard argument to get through sometimes, because it’s like hiring a slob to be a housekeeper or a morbidly obese person to sell gym memberships. But there’s just so much measurement error in these reports, so much adverse impact, and you really don’t need to look any further than the fact that none of the research (that I’ve seen, anyway) shows any validity for them for the kinds of jobs managers want to use them for.

Anyway, the summary of the EEOC meeting is worth a read, and hopefully they’ll put out some kind of white paper or summary of their own in the near future.

2 Comments on “EEOC Holds Public Meeting, Fans Go Crazy”

  1. David says:

    While not exhaustive, my old team and I did a pretty thorough search of the credit history validation literature and hardly came up with any empirical evidence. There is a lot of case study and “best practice” content, but these follow more common sense and urban legend approaches. So we did what any I/O team worth their salt would do, we conducted our own empirical study. We compared several credit history variables (e.g. total accounts past due, ratio of current debt to starting salary, and a few more I can’t remember of the top of my head) to sales production and tenure data for 300 Mortgage Specialists. Our results showed absolutely no relationships. It amazes me every time have a conversation with HR and business people about implementing a cognitive ability or personality assessment. Automatically they raise issues against the idea. However when I ask them what they think about using Credit History (or drug testing for that matter) they seem to blindly accept these. Interesting side note. When we finally implemented our sales assessment, our legal team required us to constantly monitor the test’s adverse impact (which it had none). One day I made the point that we should actually be concerned with adverse impact for the entire process and identify which steps accounted for the greatest variance and explore alternatives. I hit a wall when an executive said, “Well we’re not going to get rid of credit history and background checks, it is part of the company’s compliance initiative.” So I gave up. Fact is we spent nearly a million dollars a year of background checks and drug tests (not to mention this added about 9 days to the process) and had no idea what impact or ROI it had.

  2. Adam Klein says:

    First, thank you for taking this issue seriously. I would be interested in discussing a way to drive home the point that the use of credit history isn’t useful in selecting applicants for employment.
    Please feel free to call me at 212 245-1000 to discuss this topic confidentially.
    Adam Klein, Esq.
    3 Park Avenue
    New York, New York 10016