Current testing and selection practices in schools and the workplace are examined to describe the experiences of handicapped people and to determine the extent to which testing is a barrier to the full participation of handicapped people in society. The Panel on Testing of Handicapped People dealt in depth with the legal and psychometric issues relating to the testing of people with handicapping conditions and to the testing requirements of the regulations implementing Section 504 of the Rehabilitation Act of 1973. They concluded that current psychometric theory and practice do not fully comply with the regulations as currently drafted, recommending necessary research: studies of test validity, validation procedures, test modifications, and investigation into the role of test scores in decision making. Chapters in this report discuss: (1) ability testing and handicapped people, (2) admissions testing for post-secondary education, (3) testing for job selection, (4) the legal context of Section 504, (5) psychometric requirements of the regulations, (6) recommended policies and procedures, and (7) recommended research. A review of literature and summary proceedings of an open meeting of the Panel (1980) are appended. (PN)