What to Know About Compliance and Cutoff Scores

When talent acquisition teams are evaluating interviews and hiring equipment today, they’re interested in more than just scalability and ease of use—they’re also concerned about compliance and legal protection.

In addition to having the right thing to do, equitable hiring practices are also encoded and enforced by law. In an unpredictable economic climate, no one wants to face surprising legal fines. a recent report received That since 2000, the vast majority of large corporations in the US—including 99 percent of Fortune 500 companies—have paid in at least one employment discrimination or harassment lawsuit.

In this article, we will walk you through various compliance guidelines to keep in mind in your recruitment process. We’ll also discuss how compliance affects you cutoff score: The score range you use to decide when to move candidates.

Comment: This article constitutes general information, not legal advice. You should always involve your legal advisor in conversations about compliance and legal defense. They will understand the full context of your business and can inform you of changes to local and federal laws.

Adverse effect

EEOC (Equal Employment Opportunity Commission) defines A substantially different rate of selection in a recruitment, promotion or other employment decision that works to the detriment of members of a race, gender, or ethnic group, as an adverse effect.

What does “significantly different” mean? The agency uses the “4/5” or “80 percent” rule of thumb: the selection rate for any race, gender or ethnic group should be no less than 80 percent of the selection rate for the group with the highest selection rate.

Let’s unpack this: Imagine that 50 women and 200 men applied for software engineering positions at your company last quarter, and 3 women and 20 men were hired. So you would have a 6 percent selection rate for women and a 10 percent selection rate for men. Since 6/10 is less than 4/5, the EEOC’s rule of thumb would suggest that female applicants are adversely affected.

increasingly, states (like new york) Leveraging recruitment technology into your recruitment process is implementing additional legislation to minimize adverse impacts, making it even more important to have a robust strategy to maintain compliance at all levels.

what can you do

No business intends to create an adverse effect, but it can happen for a variety of reasons, including unconscious bias. To improve diversity and equality in your organization, it’s a good idea to be proactive about adverse effects. If you’re working with an appraisal vendor, you have the advantage of data. Here are some steps you can take:

1. Know Where You Stand

To perform an adverse impact analysis, your evaluation vendor should be able to help you pull up relevant data on candidate pass rates at various points in your funnel. It can help you compare results for race, gender, and ethnic groups (when assessing groups, consider those that constitute 2 percent or more of your applicant pool).

By understanding your metrics, you can begin to create plans for improvement—which will vary based on whether the drop off is at the screening, interview, or offer stage.

2. Adjust Cutoff Score

What can you do if you identify an adverse effect at the technical evaluation level? In this case, you may want to work with your salesperson to adjust the cutoff score or threshold to advance candidates. Assessments are powerful tools, but they also need to be carefully and continuously tuned to achieve the most equitable results.


When it comes to avoiding employment discrimination, preventing adverse effects is a business’s first line of defense. If the EEOC is adversely affected during the course of the investigation, they will demand Recognition Regarding the recruitment process. Verification is the backstop that can protect your business from further action.

According to EEOC guidelines, “Verification is the demonstration of job relatedness of a selection process.” Importantly, any form of verification requires evidence—which can be obtained from occupational data or through validity studies conducted elsewhere—that the selection process is related to successful performance on the job.

what can you do

Working with an appraisal vendor will help you verify your assessments more easily, as you will have access to structured data and records on your assessments, as well as tools to make your processes more consistent. However, it is important to educate yourself about these tools and to avoid making the assumption that all vendors will only handle the verification phase completely.

1. Do Routine Job Analysis

Creating a valid assessment begins with understanding the job you are hiring for. You can have a good set of interview questions, but if those questions are not relevant to this particular role, they are not valid.

Therefore, in order to select the right type of assessment for the role, it is essential to do a job analysis. These structured, scientific evaluations are often carried out with the help of io psychologist, They need to be replicated as job requirements can change over time.

Here in CodeSignal, we do a . make use of Combination Job Analysis Method Which brings the duties of the job together with the knowledge, skills, abilities and other person-related attributes (KSAO) that an employee needs to be successful in the role.

2. Use a Skills Assessment Framework

While many assessment vendors provide a library of questions for you to choose from, some are moving towards even more structure and consistency by introducing a skills assessment framework. Skill assessment frameworks are like blueprints for building interviews that are consistent and repeatable. They are built around specific roles and tested by subject matter experts to ensure validity.


While employment is not related to discrimination, GDPR There is an important compliance category to be aware of when evaluating recruitment solutions. GDPR protects the personally identifiable information (PII) of candidates. This applies to EU organizations or non-EU companies that provide goods and services to EU residents or monitor their behaviour.

what can you do

GDPR Affects How You Can Collect, process and store data from candidates. This includes the “right to be forgotten”, which means that if a candidate asks you to delete your information, you must do so within 1 month. To comply with GDPR, you also need to transparently share how candidates’ data is used.

1. Audit how you collect and use candidate data

This includes your ATS, any spreadsheets, and how data about candidates in your company is shared. What procedures do you have in place to keep this data secure? How do you fix inaccuracies?

2. Make sure your devices are GDPR compliant

Any hiring and interviewing tools and services you work with must be GDPR compliant. Your business is also liable if your contractors or software fails to comply with GDPR.

CodeSignal is GDPR-compliant, and we provide a research-backed, validated skills assessment framework. We are always happy to help existing and potential clients with any questions regarding compliance and legal protections for employment discrimination. To learn more about CodeSignal, reach out today and schedule a demo.

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