That's interesting; it conflicts with one of the few pieces of evidence I have about successful correlation in recruitment. I don't have the study to hand, but I'm sure its conclusions were that people who do well at IQ tests (although they might have been more general intelligence tests rather than specifically IQ tests) tend to make better technical employees (or indeed, almost any kind of employee), and that's it's one of the few actually reliable indicators. As a strong rule of thumb, smart people are better at technical jobs.
What's the thinking behind taking it as a sign of a bad employer?