Polygraph Testing?

The Employee Polygraph Protection Act (EPPA) became effective in December of 1988, having been passed by Congress the previous June.

The EPPA prohibits the use of all mechanical lie detector tests in the workplace, including polygraph, psychological stress evaluation, deceptographs, and voice stress analyzers.

When the employer is the U.S. Government, or any state or local government, however, the prohibition does not apply.

Does that mean that financial institutions can no longer use the lie detector? No, it does not. The Employee Polygraph Protection Act allows one type of lie detector test, the polygraph, to be used by private sector employers as an aid in investigations of incidents involving specific loss or economic injury to an employer.

Any employer can request an employee to undergo a polygraph examination as long as the employer adheres to very specific guidelines regarding economic loss, access, and reasonable suspicion.

Economic Loss
The test must be administered in connection with an ongoing investigation involving economic loss or injury to the employer's business-such as theft, embezzlement, or the misappropriation of confidential secret information. The economic loss must result from intentional wrongdoing, and not accidental losses. It must be a loss of the employer. Therefore, a theft committed by one employee against another does not satisfy the requirement. And the ongoing investigation does not allow a polygraph test to be used to determine whether an employee has used drugs or alcohol.

Access
Only employees who have access to the property that is the subject of the investigation may be polygraphed. Generally, all employees who have the ability to divert possession of the property that is the subject of the investigation will be deemed to have "access" under the ongoing investigation exemption.

Reasonable Suspicion
In addition to access, there must be a basis for reasonable suspicion that the employee to be polygraphed was involved in the incident or activity under investigation. The phrase "reasonable suspicion" simply means that the employer must have an articulable basis to believe that the employee may be involved in, or responsible for, the economic loss or injury.

These suspicions must not be based on whimsical or arbitrary factors. Information from a co-worker, or information derived from an employee's behavior, demeanor, or conduct may be factors in forming a "reasonable suspicion." Additionally, inconsistencies between facts, claims or statements that surface during an investigation can serve as a basis for "reasonable suspicion." So long as the financial institution can describe and articulate a reasonable basis for the suspicions, this requirement will be satisfied.

No Fishing Expeditions
The polygraph cannot be used to determine which person to suspect. But given a tip, or mitigating factors-financial problems, absence at improbable times, inconsistencies, failure to account for actions or activities, policy violations, previous credibility problems?in short? most anything that would cause you, a reasonable person, to suspect someone, is enough to meet the requirements of reasonable suspicion.

48 Hour Notice
Before an examination can be administered on a specific loss, the financial institution and employee both sign a statement that sets forth the loss, indicates the employee had access, and describes the basis of the reasonable suspicion. This statement must be prepared and signed by both the employer and the employee 48 hours before any test is administered. A copy must be held by the financial institution for three years.

Employee Rights
There are certain rights an employee has in relation to the test. They include, among others, a brief description of the instrument involved, knowledge as to whether the test is being recorded (either audio or visual), the opportunity to review the questions, and the results of the examination.

The financial industry has avoided the use of the polygraph since the passing of the EPPA. Some states have laws that are even more stringent that the government act.

But, given the knowledge that once the requirements are met, the polygraph is usable, more financial institution attorneys are agreeing it is one of the best tools possible in investigating insider abuse.

Copyright © 1991 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 2, No. 5, 6/91