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This study examines the relationship between teachers' criteria for grouping children and the socioeconomic status of those children, and investigates the extent of the socioeconomic segregation which is occurring in classrooms because of teachers' grouping practices. The sample consists of 37 elementary school teachers and their students. The teachers were asked to recommend their pupils for placement in high, middle, or low reading groups for the following year and name the criteria on which they based the placement of each child. These ratings were then compared with another rating of the same pupils based on reading comprehension test scores. A comparison of the two ratings shows that teachers placed some pupils in groups other than indicated as appropriately by their reading test scores. An examination of the rating criteria indicates that teachers rely mainly on perceived ability, achievement, and work habits; however, some students were misplaced on the basis of nonacademic criteria relating to social class. The author concludes that these findings do not fully support the commonly held belief that teachers are furthering socioeconomic segregation in their classrooms by using criteria for grouping which are related to students' socioeconomic status. (RWP)