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Employers can save money on their workers compensation costs by weeding out dishonest employees or those likely to malinger during their recovery periods before even hiring them.
Independent university studies have demonstrated the value of integrity tests that screen for hostility, drug and alcohol abuse, theft and lying in the pre-employment phase. But these tests have yet to reach their full potential because of employer concerns about lawsuits, reducing their talent pools or the difficulty they have in breaking down risk management and human resources silos.
Retired psychology professor Peter Bullard of Portland State University in Oregon developed the integrity testing concept about 30 years ago after being approached by an employer experiencing trouble with employee theft.
“What he was attempting to do was weed out people whose value systems are skewed where their version of right and wrong is basically different from what an employer would expect it to be,” said Mark Walker, vice president of business development for Merchants Information Solutions Inc., a Phoenix-based provider of integrity testing services.
While reducing employee theft was the initial goal, researchers discovered such testing could have other positive benefits, including with reducing workers comp costs, because potential employees who are inclined to steal can do so in multiple ways, such as malingering or faking injuries, said Craig Nelson, senior vice president of New York-based consultancy Corporate Risk Solutions L.L.C.
A sample integrity test question could be “Have you ever pretended to have a work injury to collect workers compensation insurance?” The answers: A. Never; B. Only once; C. Only twice; D. Several times.
Workers comp consultants are big fans of integrity testing, with the cost for testing each potential employee generally falling under $20. But while the overwhelming majority of employers like the concept, many have yet to adopt the testing, consultants say.
“If you only have $10,000 or $20,000 to improve your program, this is a great way,” said Joe Picone, claim consulting practice leader for Willis Towers Watson P.L.C. based in Richmond, Virginia.
“If I had a company, I’d do it, but I can’t convince my clients yet to bite the bullet.” The silos that exist between risk management and human resources departments serve as a major barrier, with HR officials questioning why risk managers are wandering onto their terrain, observers say.
“The biggest roadblock for the risk manager is human resources,” Mr. Nelson said.
Another barrier to widespread adoption is a fear of dramatically reducing the potential talent pool — a particular challenge for industries such as health care, which often have trouble finding qualified applicants, or in high-turnover sectors such as quick-service restaurants and retail, experts say.
“They have trouble filling positions, and when you add other things like drug testing and background screening, they start getting down to 40 to 50% rejection,” said Keith Rosenblum, national accounts senior strategist for workers compensation risk control at Lockton Cos. L.L.C. in Kansas City, Missouri. “My response to that is, ‘Look, you’re eliminating the bottom feeders.’ These are the people that create disruption in your service.”
Employers also question the legality of such testing and express concerns that employees rejected due to the test results will sue, but the service providers have taken steps to alleviate those fears. At Merchants’ request, Gavin Appleby, an Atlanta-based shareholder with Littler Mendelson P.C., examined the company’s IntegrityFirst test and wrote a legal opinion letter in October 2016 to potential clients affirming that the test was compliant with all applicable state and federal laws.
The University of Arizona works with Merchants to ensure its test does not unfairly screen out potential employees based on protected classes such as race, sex, religion or age.
“The biggest concern I hear from people is the legality of this, and yet every day in our job interviews we’re asking questions that are far more risky than anything asked in these tests,” said Stephen Gilliland, executive director of the Center for Management Innovations in Healthcare at the University of Arizona’s Eller College of Management in Tucson. “I have much more faith in using a consistent test like this to weed out people than having managers ask whatever question pops into their mind, which could completely cross the line.”
The U.S. Equal Employment Opportunity Commission in November 2013 also issued an informal discussion letter that clarified that integrity tests do not violate the Americans with Disabilities Act so long as they are limited to asking applicants about their current drug use rather than past usage or rehabilitation.
“It’s extremely rare that anybody even challenges this result,” Mr. Nelson said. “Why is that? Because it’s all self-admitting.”
Employers are often incredulous that potential employees answer these questions honestly, but 25% of job applicants admit to behaviors most employers consider high-risk. The willingness to be truthful can be directly tied to the concept of cognitive dissonance, with these potential employees so engaged in such behavior that they rationalize or justify it, or develop an entitlement mentality.
“I am just blown away by this,” Mr. Rosenblum said. “The reason is that they feel like everybody takes drugs in the workplace, everybody steals product from their employer. It’s accepted. They actually believe that, therefore, they don’t feel it’s going to jeopardize their getting a job.”
Merchants does not often change its integrity tests, but has recently done so to keep up with evolving state laws on medical marijuana use, including changing certain questions on recreational marijuana usage to focus on workplace behavior, Mr. Walker said.
“That’s one of the most admitted-to questions on our survey,” he said.
Frank Russo, senior vice president of risk and legal affairs and privacy officer for Irvine, California-based elder care firm Silverado, is always on the lookout for creative ways to mitigate risk.