Employee Theft

Workplace Thefts

Workplace polygraph testing has declined since the passage of the American polygraph Protection Act.  The Employee Polygraph Protection Act of 1988 (EPPA) generally prevents employers from using lie detector tests, either for pre-employment screening or during the course of employment, with certain exemptions. Employers generally may not require or request any employee or job applicant to take a polygraph test, or discharge, discipline, or discriminate against an employee or job applicant for refusing to take a test or for exercising other rights under the Act. In addition, employers are required to display the EPPA poster in the workplace for their employees.

There are exceptions to the law:

Subject to restrictions, the Act permits polygraph tests to be administered to certain job applicants of security service firms (armored car, alarm, and guard) and of pharmaceutical manufacturers, distributors, and dispensers. Also Federal, State and local governments have exempted themselves from the law.

Subject to restrictions, the Act also permits polygraph testing of certain employees of private firms who are reasonably suspected of involvement in a workplace incident (theft, embezzlement, etc.) that resulted in specific economic loss or injury to the employer.

Where polygraph examinations are allowed, they are subject to strict standards for the conduct of the test, including the pretest, testing, and post?testing phases. An examiner must be licensed in States that require it and be bonded or have professional liability coverage. The Act strictly limits the disclosure of information obtained during a polygraph test.

The American Polygraph Protection Act (EPPA) provides that employees have a right to employment opportunities without being subjected to lie detector tests, unless a specific exemption applies. Where polygraph examinations are allowed, they are subject to strict standards at the pre-test, testing, and post-testing stages. Specific notices must be given to employees or prospective employees. The Act also provides employees the right to file a lawsuit for violations of the Act. In addition, the Wage and Hour Division accepts complaints of alleged EPPA violations.

There are specific notices that must be given to examinees and examiners in instances where polygraph tests are permitted:

When a polygraph test is administered pursuant to the economic loss or injury exemption, the employer is required to provide the examinee with a statement prior to the test, in a language understood by the examinee, which fully explains the specific incident or activity being investigated and the basis for testing particular employees. The statement must contain, at a minimum, the following information:

  • An identification with particulars on the specific economic loss or injury to the business of the employer
  • A description of the employee’s access to the property that is the subject of the investigation
  • A detailed description of the basis of the employer’s reasonable suspicion that the employee was involved in the incident or activity under investigation
  • The signature of a person (other than the polygraph examiner) authorized to legally bind the employer

Every employer who requests an employee or prospective employee to submit to a polygraph examination, pursuant to the ongoing investigation must provide:

  • Reasonable written notice (at least 48 hrs.) of the date, time, and place of the examination and the examinee’s right to consult with legal counsel or an employee representative before each phase of the test.
  • Written notice of the nature and characteristics of the polygraph instrument and examination
  • Extensive written notice explaining the examinee’s rights, including a list of prohibited questions and topics, the examinee’s right to terminate the examination, and the examinee’s right to file a complaint with the Department of Labor alleging violations of EPPA

Employers must also provide written notice to the examiner identifying the persons to be examined.

Where the American Polygraph Protection Act (EPPA) permits the administration of polygraph tests, recordkeeping requirements apply both to employers and polygraph examiners. Employers and polygraph examiners must retain required records for a minimum of three years from the date the polygraph examination is conducted (or from the date the examination is requested if no examination is conducted).

Employers investigating an economic loss or injury must maintain a copy of the statement that sets forth the specific incident or activity under investigation and the basis for testing that particular employee and proof of service of that statement to the examinee.

Employers who manufacture, distribute, or dispense controlled substances must maintain records specifically identifying the loss or injury in question and the nature of the employee’s access to the person or property that is the subject of the investigation.

Every employer who requests an employee or prospective employee to submit to a polygraph examination pursuant to the ongoing investigation, drug manufacturer, or security services EPPA exemptions must maintain:

  • A copy of the written statement that sets forth the time and place of the examination and the examinee’s right to consult with counsel
  • A copy of the written notice provided by the employer to the examiner identifying the persons to be examined
  • Copies of all opinions, reports or other records furnished to the employer by the examiner relating to such examinations

All polygraph examiners must maintain all opinions, reports, charts, written questions, lists, and other records relating to polygraph tests of such persons, as well as records of the number of examinations conducted during each day, and the duration of each test period.

All exempt private sector employers and polygraph examiners retained to administer examinations to persons identified by employers must keep the required records safe and accessible at the place or places of employment or business or at one or more established central recordkeeping offices where employment or examination records are customarily maintained. If the records are maintained at a central recordkeeping office, other than in the place or places of employment or business, such records must be made available within 72 hours following notice from the Secretary of Labor or an authorized representative such as Wage and Hour Division personnel.

More detailed information, including copies of explanatory brochures and regulatory and interpretative materials, may be obtained from a local Wage and Hour office(http://www.dol.gov/whd/america2.htm).

The Department of Labor provides employers, workers, and others with clear and easy-to-access information and assistance on how to comply with the Employee Polygraph Protection Act. Compliance assistance related to the Act, including the Employee Polygraph Protection Act (EPPA) Fact Sheet(http://www.dol.gov/whd/regs/compliance/whdfs36.pdf), and regulatory and interpretive materials, is available on the Compliance Assistance “By Law”(http://www.dol.gov/compliance/laws/comp-eppa.htm) Web page.

After reading the above no wonder employers sometime decline to use the polygraph test as a tool to learn the truth.   Just remember you can use polygraph test in the workplace when you comply with the EPPA Law.

I’m going to tell you about one incident where it was used.  However, I have changed the names and other identifying information to protect the identities of the parties involved and no inferences should be drawn to imply that any particular employees took these tests under EPPA.

This case involves stolen items from the employer’s product inventory.  These items amounted to several thousand dollars in value.  The property was stolen over a three month time frame and only three employees had access to the missing property.  The owner of the company called this examiner and wanted to test all of his employees.  He thought this would be a fair approach.  He explained that if he tested everyone he was not singling out any.

I explained the EPPA law to him and advised to only test employees that he articulate reasonable suspicion against.  As it turned out there were three (3) employees that had limited access to the property taken and he could define reasonable suspicion about.  He employed me to do three tests.

The tests were scheduled with 48 hour notice in advance.  The first employee was fairly new.  He had only been working for him for about six (6) months. He was known to have been having financial problems.  The second employee was a department supervisor and longtime employee.  The third was an employee that had admitted small thefts in the past but denied that he had taken any of the property in question.

When I analyzed the polygraph data I told the employer that his longtime employee was the only one that failed the test.  He was shocked and surprised about my findings. He told this examiner that he would think about my results for a while before confronting this employee.  I did not tell any of the employees what the results of their tests were.

About two days later I got a call from the employer advising that the trusted employee that failed the test confessed.  She confessed not only to what was reported missing but also to several other items that the employer did not even know were missing.

He turned over his investigative information to the police and the employee was prosecuted.  He recovered or received restitution for all of his stolen property. Needless to say, he fired the employee.