Want to get to the bottom of some misconduct in the workplace? Think maybe having the individuals involved undergo lie detector tests would be the quickest way to ferret out the facts? Think again. The federal Employee Polygraph Protection Act (“EPPA”) makes it generally unlawful for a private employer to request an employee or prospective employee take a polygraph. EPPA also precludes employees from taking any adverse action against an employee or prospective employee who refuses to submit to a lie detector test or on the basis of the results of a lie detector test. Although the law is clear and has been in place since 1988, some employers are still apparently unaware of it. Violations of EPPA recently resulted in a federal jury in Camden, NJ awarding over $4 million in damages to three employees who alleged they were fired for refusing to submit to polygraphs.

The defendant employer, Flagship Development Corporation, Inc. (“Flagship”), operator of an Atlantic City timeshare, was investigating the alleged theft of $3,000. The theft victim told her employer she believed the plaintiffs, who worked in various telemarketing capacities for Flagship, were responsible for the theft. During the course of the investigation, the theft victim willingly submitted to a polygraph following discussions she had with a private investigator hired by Flagship. The investigator also suggested the plaintiffs undergo polygraphs, but they refused to do so. Two weeks later, Flagship terminated the plaintiffs’ employment, believing the plaintiffs had been involved in the theft.

The plaintiffs brought suit against Flagship alleging their terminations violated EPPA, as well as a New Jersey law prohibiting polygraphs. The plaintiffs alleged that both the results of the victim’s voluntary submission to a polygraph and their own refusal to submit to polygraphs caused Flagship to terminate them. Flagship responded that the polygraph administered to the theft victim, a non-party to the suit, could not form the basis of the plaintiffs’ claims of an EPPA violation. Flagship also asserted that the individual who terminated the plaintiffs was not even aware that the investigator had suggested the employees undergo polygraphs.

The jury was unconvinced by Flagship’s arguments and found that the polygraph test administered to the theft victim, as well as the plaintiffs’ refusals to submit to polygraph tests, were motivating or causative factors in Flagship’s decision to terminate the plaintiffs’ employment. The jury awarded over $1 million in lost wages and other damages to the three plaintiffs, who collectively earned approximately $135,000 annually. The jury also awarded $2.98 million in punitive damages to the three.

EPPA does have limited exceptions permitting polygraphs of employees within certain parameters when administered in connection with an ongoing investigation involving economic loss or injury to the employer’s business. New Jersey’s law also has an exception to its proscription against employers requesting employees or prospective employees submit to lie detector tests, when the employer is authorized to manufacture, distribute, or dispense controlled dangerous substances. Both laws, however, are broadly applied to prohibit polygraphs. The best course for most employers to follow is not to suggest lie detector tests to their employees or applicants.