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In the context of selecting people for jobs and appraising their performance, “job validity” refers to the validity of the measures that are used for selection and appraisal.
A test can be said to be valid if it truly measures what it is supposed to measure. For example, the Scholastic Aptitude Test (SAT) is supposed to measure how well a person is likely to do in college. If people with higher SAT scores tend to do better in college than those with lower SAT scores, we can say that that test is valid.
With regard to work, a test is valid if it truly predicts who will be a good worker (in the case of selection tests) or if it truly captures who has been good at their job (in the case of an appraisal). It is important that tests used for these purposes should be valid. If they are not, two problems can occur. First, you can be liable to be sued for discrimination because your test is not actually separating good workers from bad. Second, your organization can suffer. You will hire people who are not really good fits for the job. You will promote and reward people who are not actually doing their job well.
For these reasons, it is important for tests to have job validity if they are to be used to select and appraise workers.
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