[Spooky23]

They struggled with civil rights lawsuits because the previous versions were correlated with IQ, which was deemed problematic in the courts. So they transitioned to grammar and other stuff that mapped to objective facts.

Pretty sure now they use documentation of education and experience in most cases.

[tptacek]

This is mostly an Internet legend; IQ tests in employment are broadly fine, and lots of huge companies with lots to lose in employment litigation use them, openly and proudly. They're not more widely used because they're not very effective.