Human Resources News & Insights

Pre-hire assessments have Target Corp. on the hook for $2.8M

The EEOC has found some of Target Corporation’s pre-hire assessments wanting. 

The EEOC investigated the Minneapolis-based retail corporation’s hiring practices after hearing reports of possible violations, and the federal agency claims to have found several things that are illegal.

For starters, the EEOC said three pre-hire employment assessments Target used disproportionately screened out applicants for exempt professional positions based on race and sex. It’s estimated the number of those affected was in the four-figure range.

The EEOC said the tests weren’t sufficiently “job-related and consistent with business necessity” to pass muster under the Civil Rights Act.

To make matters worse, the EEOC said one of those assessments also violated the ADA. It said that assessment was performed by psychologists and qualified as a pre-employment medical exam, which are prohibited by the ADA. Only after being given an offer of employment can an employee be asked to undergo a medical exam, and it has to either be part of a voluntary wellness program or “job-related and consistent with business necessity.”

Finally, the EEOC claimed that Target committed record-keeping violations by failing to maintain records sufficient enough to assess the impact of its hiring procedures.

The EEOC likely would’ve filed suit against Target for the alleged offenses, but it’s first required to enter into its conciliation process.

During that process, Target agreed to settle for $2.8 million, which will be distributed to those individuals deemed to have been adversely affected by its hiring processes.

Target spokesperson Molly Snyder told Fortune that the company decided to settle with the EEOC because of the significant resources that would be required if the case were to go to court.

As part of the agreement, Target has said it will also:

  • not use the assessments in question again
  • change its applicant tracking system to ensure the collection of data is sufficient to assess adverse impact
  • perform a predictive validity study for all assessments currently in use and any new assessments it expects to use in the future
  • monitor assessments for adverse impact, and
  • provide the EEOC with a detailed summary of the company’s studies and any adverse impact analysis it completes.

“We applaud Target for taking corrective action to ensure the validity of their hiring practices,” said EEOC Chair Jenny R. Yang in a statement released by the agency.  “This resolution demonstrates the benefits of working with EEOC and serves as a model for businesses committed to effective and lawful selection procedures.”

Snyder went on to tell Fortune that despite the fact that the EEOC found tests that had potential adverse impact on applicants, no disparities in Target’s hiring practices were found.

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