1. Pre-Offer Stage

The organization may not conduct certain assessments, or inquire about disabilities in the pre-offer stage, as a potential employer may not conduct a “medical examination” in the pre-offer stage.² A medical examination under the ADA is broader than simply having a medical doctor conduct a physical. It also includes psychological tests that are designed to identify a mental disorder or impairment, such as the MMPI or other similar tests.³ So if an organization is giving a candidate the MMPI-2, or another psychological test designed to identify pathology prior to giving the candidate an offer to join, it is almost certainly violating the ADA and risking legal liability.

However, not every readiness assessment an organization may wish to give to a candidate qualifies as a medical examination under the ADA. For example, psychological tests that measure personality traits such as honesty, preferences, and habits are typically not considered medical examinations under the ADA.⁴ As long as they do not violate the prohibition on disability-related questions, discussed in more detail below, the ADA has no prohibition on giving these latter category of assessments before an offer is made.

Disability-related questions in general are prohibited.⁵ This prohibition applies whether the questioning is done in an interview or during psychological screening. A disability under the ADA is fairly broad and includes a physical or mental impairment that substantially limits one or more major life activities.⁶ Specifically, prohibited questions would include whether the candidate is an individual with a disability; the nature or severity of a disability; and questions that would reasonably elicit a response with this information. For example, asking a candidate whether he or she has a history of depression or has ever taken anti-depressants is probably prohibited.

Unlike most of the ADA, prohibitions at the pre-offer stage are not limited to disabled employees.⁷ This means both disabled and non-disabled employees would be able to bring a claim for violation of these rules.

While disability-related questions and certain psychological tests are prohibited until after an offer has been made, an employer has wide leeway to conduct its hiring procedures within the confines of the ADA. Normal questions asked during the hiring process are fair game: inquiries into the abilities of an applicant to perform job-related functions;⁸ or questions about how, with or without reasonable accommodation, the applicant will be able to perform job-related functions.⁹ And while many psychological tests are prohibited pre-offer, the ADA does permit a wide variety of tests and assessments, as long as they are not considered “medical examinations” and do not ask “disability-related questions.”

Finally, the ADA does not prohibit evaluation of the applicant’s non-medical qualifications and skills, such as background checks, reference checks, and education.

2. Post-Offer Stage

The ADA’s prohibition on medical examinations and disability-related questions does not take in-depth psychological screening off the table completely; it simply requires that an employer give an offer of employment to the prospective employee before conducting the screening. While the exact timing of when the psychological screening is conducted may seem like the law is elevating form over substance, there is a rationale behind the law. The purpose behind the two-stage system is to help encourage employers not to illegally consider disability in the employment decision, and to assist applicants who are screened out because of disabilities to identify the discriminatory basis as the real reason for the failure to hire. The law takes this procedural order seriously. In fact, the EEOC has advised “An employer may not . . . require a medical examination, even if the employer intends to shield itself from … the results of the examination until the post-offer stage.”¹⁰

In order to be ADA-compliant, screening involving a medical examination component must be set up as a two-stage system. In the first stage, all non-medical qualifications must be evaluated. After all the information that could reasonably be obtained about the applicant is reviewed, a job offer is extended. This offer may be contingent on the results of a later examination.¹¹ While conditional offers before medical examination are permissible; the offer must be real. “A job offer is real if the employer has evaluated all relevant non-medical information which it reasonably could have obtained and analyzed prior to giving the offer.”¹² Some courts have gone so far as to hold that if the offer is contingent on anything but the medical examination, it is not a real offer.¹³ As a second stage, the applicant may be given a medical examination, which includes most psychological screenings done by a licensed mental health professional.

Organizations that get the offer/assessment order wrong can end up in trouble.¹⁴ This is the case even if the decision-maker does not take the offending test results into consideration in the employment decision.¹⁵ At least one court has held that even successful applicants could later come back and sue on this issue.¹⁶

For employers who chose to conduct psychological assessments after giving a conditional offer, the ADA imposes a few additional rules. For a given class of positions, the same testing must be given to all entering employees.¹⁷ This means an organization cannot pick and choose among candidates; for example, which candidates should submit to psychological screening and which should not. If the organization wants to perform psychological examinations that qualify as medical exams under the ADA, it must give the test to all candidates. Second, the information must be treated as a confidential medical record and shared only as permitted by rules.¹⁸ Finally, the results of the exam cannot be used inconsistently with ADA.¹⁹

Technically, once an employer is permitted to give a medical examination under the ADA, the ADA “imposes no restrictions on the scope of entrance examinations; it only guarantees the confidentiality of the information gathered … and restricts the use to which an employer may put the information.”²⁰ In other words, the ADA does not restrict what kind of examination may be performed at this point. It does, however, regulate how the results of such an examination may be used by the employer. “If an employer withdraws the offer based on medical information (i.e., screens him/her out because of a disability), it must show that the reason for doing so was job-related and consistent with business necessity.”²¹ If the psychological examination reveals a reason why the candidate should not be hired, the organization must explain why that reason disqualifies the candidate from doing the job.

This means that the fact that medical examinations are being given puts the organization at some risk, because it gives the appearance that the organization is in fact screening for disabilities. The organization should have clearly stated in its job descriptions why certain qualities are job-related and consistent with business necessity.

3. Assessments During Employment

After an employee has joined the organization, there may come a time when the organization would like to conduct additional psychological testing to ensure that the employee is still fit for the job, particularly if the employee is having problems. This kind of screening may also be permissible under the ADA if it is job-related and consistent with business necessity. Practically, this standard permits additional testing in a few main ways.

First, at some time after the employee is hired on, an employer may become aware of problems. At this point, it may want to make inquiries or require additional psychological examinations, because there is an objective need to determine whether an employee is still able to perform the essential functions of his or her job.²² “Generally, a disability-related inquiry or medical examination of an employee may be job-related and consistent with business necessity when an employer has a reasonable belief, based on objective evidence that: (1) an employee’s ability to perform essential job functions will be impaired by a medical condition; or (2) an employee will pose a direct threat due to a medical condition.”²³ “An individual does not pose a ‘direct threat’ simply by virtue of having a history of psychiatric disability or being treated for a psychiatric disability.”²⁴ There must be more evidence than that.

Second, in limited situations, “periodic medical examinations of employees in positions affecting public safety that are narrowly tailored to address specific job-related concerns are permissible.”²⁵ To meet this exception, the employer must show that the monitoring addresses job-related concerns. EEOC guidance suggests that employees who work in positions affecting public safety, such as police officers, firefighters, or airline pilots are the main focus of this exception.²⁶

4. Safeguarding the Information

Whether conducted post-offer or during employment, any time an employer does a psychological screening that qualifies as a medical examination, the ADA requires the employer to keep confidential information concerning the medical condition or history of its applicants or employees, including information about psychiatric disability.²⁷ Results from psychological testing should only be shared with select individuals. For example, the ADA and its regulations note that it is permissible for individuals making the hiring decision to receive this information. Supervisors and managers may be informed of the results to the extent necessary to explain necessary restrictions on the work or duties of the employee and necessary accommodations. First aid and safety personnel may be informed, when appropriate, if the disability might require emergency treatment. Information may be shared with government officials investigating compliance with the ADA upon request. Information covered under the ADA must be kept in separate medical files, apart from the usual personnel files.

1. Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) is another federal law that places limitations on the pre-employment screening process. The FCRA applies whenever an organization uses a third party provider to perform background checks, credit checks, or similar screening checks. To comply with the FCRA, the employer needs to get permission from the applicant to do the screening. Even if the organization is not using a third party, this is best practice. The employer must also provide a notice that it may use the information obtained in the hiring process. Using a reputable third party provider is likely to assist greatly in complying with any of the FCRA’s mandates.

2. Age Discrimination in Employment Act

The Age Discrimination in Employment Act (ADEA) prohibits employers with 20 or more employees from discriminating against individuals age 40 and older in the workplace.³³ Under this federal law, age discrimination is forbidden in all aspects of employment including hiring, firing, training, promotions, benefits, job reassignments, and any other terms or conditions of employment. While the ADEA does not explicitly prohibit questions about age for employment purposes, asking about a candidate’s age in the screening process may demonstrate a possible intent to discriminate based on age. If knowledge of age is required by law, it can be discovered after an employee is offered a position.

3. State and Local Laws

Depending on the jurisdiction, other state or local laws may apply to restrict what an employer can ask during the hiring process. For example, many states have their own version of the FCRA that gives applicants certain rights when it comes to pre-employment checks. It is important to make note of these laws in the applicable jurisdiction.

Another trend to make note of is laws related to how criminal records can be considered in hiring. The “ban the box” movement is a campaign to eliminate the requirements that job applicants “check a box” on an employment application to indicate whether they’ve ever been convicted of a crime. Several state and local governments have passed laws requiring companies to remove this question from the initial application. The goal of these laws is to encourage companies to avoid automatically screening-out former criminal offenders who may otherwise be qualified for open jobs.

In December of 2019, a federal ban-the-box law was passed. The law prohibits federal employers and federal contractors from asking about arrest and conviction history on job applications. Across the nation, these laws vary greatly depending on the state or local jurisdiction where they are enacted. In some states, compliance with these requirements is mandatory for all employers. In others, only companies with a certain number of employees are subject to the law. The laws also range significantly as to when employers can ask about criminal backgrounds. For example, in Illinois, employers with 15 or more employees are prohibited from inquiring into a candidate’s criminal record until the applicant has been selected for an interview, or until after a conditional offer is made.³⁴ Even where a state has not adopted this law, a local jurisdiction’s law may apply. For instance, Pennsylvania does not have a state-wide law, but the City of Philadelphia has a law that applies to limit how employers can use criminal records in the pre-employment screening process.³⁵ The National Employment Law Project has compiled a helpful resource that lists all the laws that have been in enacted in various jurisdictions.³⁶

1. Practicing Psychology Without a License

One concern—albeit somewhat remote—is that conducting psychological screening without proper authorization can be considered practicing psychology without a license. For example, if an employer is giving psychological tests of the variety normally administered by licensed professionals (such as the MMPI-2), without using a licensed professional, there is potential for liability (or at least a lawsuit).

In Karraker v. Rent-A-Center, where the employer was using the MMPI as a screening tool for employment decisions, the disgruntled employees sued, arguing in part that the use of the MMPI in this manner constituted malpractice and practicing psychology without a license in violation of the state’s licensing act.³⁷ The suit was unsuccessful on that claim, but the company still had to defend it through summary judgment, which can be quite costly.

If an employer is using a licensed mental health professional to conduct its psychological screening, this issue is less of a concern. But the professional must still make it clear who is the client—the organization or the applicant. Of course, not every readiness assessment will implicate professional psychological skills.

2. State-Specific Claims

When an employer chooses to conduct invasive screening as part of hiring, there is always a risk that a disgruntled applicant may attempt to bring a common law tort claim under state law. These claims primarily revolve around the argument that such invasive screening violated privacy rights. Again, this possibility of liability is also somewhat remote, but it has occurred and employers should be aware of the risks. The following case is the main example of how liability might arise in these circumstances.

Technically, once an employer is permitted to perform a medical examination of a job applicant under the ADA, the test can be performed regardless of whether it is job-related and consistent with business necessity. But if the test is not job-related, it could implicate an employee’s privacy rights and lead to liability. In some states, the right to privacy is a constitutional right equal to life, liberty, and property, and improper screening may violate this constitutional right.

For example, in Soroka v. Dayton Hudson Corp., applicants for security positions at a retail store were given a psychological screening that included the MMPI. The applicants later brought suit against the company and sought a preliminary injunction to stop the testing, arguing, among other things, that the test violated their constitutional right to privacy. California makes the right to privacy a constitutional right. A California appellate court agreed that the applicants had a likelihood of success on the merits of the case because it held the questions, particularly about religion and sexual orientation in the MMPI, were not job-related, despite the fact that the employer tried to argue that police officers and other security staff are given these tests all the time.³⁸ The case reportedly settled for over $2 million.³⁹ In states with robust privacy protection, employers should be aware that they may have to justify more invasive screening procedures, like psychological screening, by demonstrating why the tests are necessary to determine whether the candidate is fit for the particular position.

3. Negligent Supervision and Negligent Retention

Thorough employee screening is crucial to avoiding negligent hiring claims and should be done to ensure that the organization is not putting itself or its constituents at risk. But when an organization institutes rigorous psychological testing and other screening, it may actually be imposing a higher duty on itself to monitor anyone it hires if there are red flags, and ensure that there is no risk to third parties to whom the organization may owe a duty of care.

The proper amount of screening is a delicate balance, as there is also the potential that failure to do adequate screening or monitoring can subject the organization to liability as well. Negligent hiring claims are more likely, however, when an organization fails to do any due diligence in screening, which typically includes background and reference checks. For example, in at least one case, a law enforcement agency was held liable for insufficient psychological screening during employment.