Lauren Weber and Elizabeth Dwoskin, Wall Street Journal, September 29, 2014

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The use of online personality tests by employers has surged in the past decade as they try to streamline the hiring process, especially for customer-service jobs. Such tests are used to assess the personality, skills, cognitive abilities and other traits of 60% to 70% of prospective workers in the U.S., up from 30% to 40% about five years ago, estimates Josh Bersin, principal of consulting firm Bersin by Deloitte, a unit of auditor Deloitte.

Workplace personality testing has become a $500 million-a-year business and is growing by 10% to 15% a year, estimates Hogan Assessment Systems, a Tulsa, Okla., testing company. Xerox says tests have reduced attrition in high-turnover customer-service jobs by 20 or more days in some cases. Dialog Direct, of Highland Park, Mich., says the testing software allows the call-center operator and manager to predict with 80% accuracy which employees will get the highest performance scores.

But the rise of personality tests has sparked growing scrutiny of their effectiveness and fairness. Some companies have scaled back, changed or eliminated their use of such tests. Civil-rights groups long focused on overt forms of workplace discrimination claim that data-driven algorithms powering the tests could make jobs harder to get for people who don’t conform to rigid formulas.

Julie Brill, a Democrat on the Federal Trade Commission who has examined companies’ use of data, says algorithms designed to reduce bias “ironically could have the effect of creating a new kind of discrimination.” The FTC doesn’t have the power to regulate workplace issues.

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Xerox quit looking at data about job applicants’ commuting time even though data showed that customer-service employees who got to work faster were likely to keep their jobs at Xerox longer. Xerox managers decided the information could put applicants from minority neighborhoods at a disadvantage in the hiring process.

“There’s some knowledge that you gain that you should stay away from when making a hiring decision,” says Teri Morse, Xerox’s vice president of recruitment. Overall, though, the company is “shocked all the time” by the accuracy of tests it began using in 2012, she says.

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The Equal Employment Opportunity commission is investigating whether personality tests discriminate against people with disabilities. As part of the investigation, officials are trying to determine if the tests shut out people suffering from mental illnesses such as depression or bipolar disorder, even if they have the right skills for the job, according to EEOC documents.

EEOC officials won’t comment on the investigation. In general, though, “if a person’s results are affected by the fact that they have an impairment and the results are used to exclude the person from a job, the employer needs to defend their use of the test even if the test was lawful and administered correctly,” says Christopher Kuczynski, EEOC acting associate legal counsel.

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Test sellers have said their own studies show personality tests don’t have an adverse impact on applicants based on race or gender. However, little work has been done on disabilities.

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