topynate:

But it looks like you can't use job application degree requirements without showing a business need either.

The relevant landmark case in U.S. law is the 1971 Supreme Court decision in Griggs v. Duke Power Co. The court ruled that not just testing of prospective employees, but also academic degree requirements that have disparate impact across protected groups are illegal unless they are "demonstrably a reasonable measure of job performance."

Now of course, "a reasonable measure of job performance" is a vague criterion, which depends on controversial facts as well as subjective opinion. To take only the most notable example, these people would probably say that IQ tests are a reasonable measure of performance for a great variety of jobs, but the present legal precedent disagrees. This situation has given rise to endless reams of of case law and a legal minefield that takes experts to navigate.

At the end, as might be expected, what sorts of tests and academic requirements are permitted to different institutions in practice depends on arbitrary custom and the public perception of their status. The de facto rules are only partly codified formally. Thus, to take again the most notable example, the army and the universities are allowed to use what are IQ tests in all but name, which is an absolute taboo for almost any other institution.