Recent applications of latent variable modeling (LVM) of reciprocal relationships involving employee attitudes were examined with regard to assumptions made about unmeasured variables and correlations among residuals of structural equations. Data from two published studies from the job satisfaction and organizational commitment literature were reanalyzed with LVM. The consequence of specifying residual correlations were examined for models containing nonlagged and lagged reciprocal effects. The results of model comparison tests in both samples supported the importance of specifying correlations among the residuals, and many of the residual correlations estimated were statistically significant. Moreover, specifying residual correlations resulted in most of the significant parameter estimates representing reciprocal effects becoming nonsignificant, and changes in other parameter estimates also occurred. Implications for model specification are discussed.