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Bar News - April 15, 2011

Labor & Employment Law: Last Call for Privacy – SCOTUS Upholds Employment-Related Inquiries: Drug Treatment, Mental Health and Financial Problems Fair Game


Karen Levchuk
In today’s world of heightened security and unfettered exchanges of information through social networks and other Internet media, we share a diminished expectation of privacy in our lives. This loss of privacy has extended to the workplace, where it is now common for employers to conduct extensive background checks before hiring new employees or even promoting existing ones. Private employers have fairly wide latitude to conduct such checks, with some constraints. In the public sector, employers increasingly justify their access to employee information as a proper exercise of their role in managing governmental operations.

In NASA v. Nelson, decided on January 19, 2011, the US Supreme Court considered whether the government violated employees’ informational privacy rights by asking questions about recent treatment for drug use and by inquiring into mental health and financial problems in its mandatory background check investigations. The plaintiffs were contract employees working at NASA’s Jet Propulsion Laboratory (JPL), operated by Cal Tech. Based on recommendations of the 9/11 Commission and in keeping with a 2007 Presidential order, the Department of Commerce mandated that contract employees with long-term access to federal facilities had to complete the same standard background checks as federal civil servants. Many of the plaintiff employees had worked at the JPL for years without being subject to background investigations and objected to this change in their terms of employment.

The plaintiffs challenged portions of two widely-used government background check forms. Standard Form (SF) 85 requests basic background information and is used in connection with "non-sensitive" positions. In addition to other more benign information, it asks the applicant to disclose whether s/he has "used, possessed, supplied or manufactured illegal drugs" in the past year. If the answer is yes, the applicant must provide details regarding any treatment or counseling received. SF 85 incorporates a release authorizing the government "to obtain personal information from schools, employers and others" in the course of its investigation. A second form, Form 42, is then sent to persons including former landlords, individuals provided as references, and others. Form 42 asks if the individual responding has any reason to question the applicant’s "honesty or trustworthiness." The form seeks disclosure of "adverse information" about the applicant, including "violations of the law," "financial integrity," "abuse of alcohol and/or drugs," and the applicant’s "mental or emotional stability," among other matters.

In granting the plaintiffs’ request for injunctive relief, the 9th Circuit Court of Appeals found that most of the information sought by the forms did not implicate a constitutional right of privacy. Nelson v. NASA, 530 F.3d 865, 878 (2008). The court ruled, however, that SF 85’s requirement to disclose drug treatment or counseling furthered no legitimate government interest and was likely to be held unconstitutional. The court found Form 42 even more problematic. The "open-ended and highly-private" questions contained in the form were not "narrowly tailored" to serve the government’s stated interests of verifying the identity of applicants and ensuing security.

On appeal, the Supreme Court noted that it had not addressed the issue of a constitutional right to informational privacy in many years. In two cases decided in 1977, the Court referred generally to a constitutional privacy "interest in avoiding disclosure of personal matters." NASA v. Nelson, 562 U.S. at ___, citing Whalen v. Roe, 429 U.S. 589, 600 (1977) and Nixon v. Administrator of General Services, 433 U.S. 425, 457 (1977). In both Whalen and Nixon, the Court found sufficient government interests at stake and adequate protections in place such that the plaintiffs’ asserted privacy interests were not violated. As in those cases, the Court assumed without deciding that the Constitution protects a privacy interest in avoiding disclosure of personal matters. The Court ultimately held that, "whatever the scope of the [privacy] interest, it does not prevent the Government from asking reasonable questions of the sort included on SF 85 and Form 42 in an employment background investigation that is subject to the Privacy Act’s safeguards against public disclosure."

In analyzing the claims of the NASA contract employees, the Court focused on the government’s role as a proprietor and manager. "Time and time again our cases have recognized that the Government has a much freer hand in dealing with ‘citizen employees than it does when it brings its sovereign power to bear on citizens at large.’ 562 U.S. at ___, citing Enquist v. Oregon Dept. of Agriculture, 553 U.S. 591, 598 (2008) and Waters v. Churchill, 511 U.S. 661, 674 (1994). The Court noted that history reflects that the government "has been conducting employment investigations since the earliest days of the Republic." (President Washington was reputedly a stickler for investigating candidates’ capabilities and reputations. OPM, Biography of An Ideal: History of the Federal Civil Service 8 (2002)). The Court further noted that the disputed questions were part of "a standard employment background check of the sort used by millions of private employers."

The Court rejected the argument that contract employees should be treated differently than civil servants for purposes of background checks, given that their duties were functionally equivalent and their access to NASA facilities was based on the nature of jobs performed, rather than on their status as employees. The Court noted that NASA’s contract employees perform critically important work, funded by a "multibillion dollar investment from the American taxpayer." As such, "[t]he Government has a strong interest in conducting basic background checks into the contract employees minding the store at JPL."

The Court concluded that the questions in the forms consisted of "reasonable, employment-related inquiries that further the Government’s interests in managing its internal operations." Questions about illegal drug use or procurement were deemed to provide a useful tool in screening for reliable and law-abiding employees. The "treatment or counseling" part of the inquiry, reportedly used only as a mitigating factor in "credentialing decisions," was considered a reasonable way to identify drug users who are attempting to overcome their problems. With respect to Form 42’s open-ended requests for adverse information about an applicant, the Court noted that "[a]sking an applicant’s designated reference broad, open-ended questions about job suitability is an appropriate tool for separating strong candidates from weak ones." Finally, the Court found that the Privacy Act’s (5 U.S.C. §552a(e)(1)) protections against unwarranted disclosure of personal information, including criminal penalties, served to further allay privacy concerns.

NASA v. Nelson provides a glimpse into the Supreme Court’s outlook on informational privacy in the employment context. Despite the Court’s holding, employment law practitioners will question whether, in light of the Americans with Disabilities Act and RSA 354-A (our State disability discrimination law), an employer should ever ask a job applicant questions about treatment or counseling, even in the context of illegal drug use. Likewise, asking directly or through a third party about an applicant’s "mental or emotional stability" in the course of a background check is generally not recommended. In addition, all employers should periodically review requirements under the Fair Credit Reporting Act if they are using third parties to obtain "investigative consumer reports," which include inquiries about reputation and mode of living, among other types of information similar to that sought by Form 42.

In a world where more than 40 percent of employers are believed to use social networking sites to gain information about prospective employees, there should be much more to come in this area.

Karen A. Levchuk practices in the area of employment law, as a counselor and litigator, at Ransmeier & Spellman in Concord.

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