Seyfarth Synopsis: California Labor Code section 432.2 prohibits employers from requiring that prospects or active employees take polygraph (or similar) tests as a condition of employment or continued employment. If an employer administers such tests then it must inform the test taker of the rights conferred by section 432.2. In a case of first impression, the California Court of Appeal concluded that section 432.2 may support a derivative claim for wrongful termination in violation of public policy. McDoniel v. Kavry Management, LLC.
The Facts
Kavry Management, LLC hired Steven McDoniel in July 2018 to work as an “assistant grower” at a licensed marijuana-growing facility. One month after McDoniel was hired, thieves stole cash and marijuana from the storage room at Kavry’s facility. The perpetrators were detected by CCTV systems, but were unidentifiable.
Kavry’s owner hired the services of a polygrapher, and Kavry’s employees were told to take a polygraph test. In the midst of his test, McDoniel began having second thoughts about the examination, as he had not received any information regarding his rights, and he felt the questions were odd.
McDoniel failed the test and was told he was being terminated as a result. A year later, he filed suit.
At trial, a jury found Kavry liable for violations of section 432.2 and thus also liable for wrongful termination. The jury awarded McDoniel $100,000 in noneconomic damages. The trial court denied Kavry’s motions for a new trial and judgment notwithstanding the verdict.
The Appellate Court Decision
One of the issues confronting the Court of Appeal on review was whether McDoniel stated a valid cause of action for wrongful discharge based on Kavry’s violation of section 432.2. The Court concluded that section 432.2 serves as a valid basis on which to bring a claim for wrongful termination in violation of public policy.
The Court’s discussion noted that a policy must satisfy four requirements in order to support a wrongful termination claim. First, the policy must be supported by either constitutional or statutory provisions. Second, the policy must “inure to the benefit of the public” rather than serving individual interests. Third, the policy must have been articulated at the time of termination. Fourth, the policy must be fundamental and substantial.
The Court determined that section 432.2 met all four requirements. First, section 432.2 is itself a statutory provision. Second, the rights protected by section 432.2 are public benefits, as the statute protects (almost) all private-sector employees and applicants from being forced to take polygraph tests as a condition of employment or continued employment, as well as requiring that employers advise their employees of their rights at the time of testing. Third, section 432.2 had been enacted in 1963 and amended in 1981, decades before McDoniel was asked to take a polygraph test.
In assessing whether section 432.2 meets the fourth requirement, the Court reviewed the section’s legislative history. The Court highlighted the fact that the Legislature had amended section 432.2 in 1981 to add the notice requirement in order to prevent abuses suffered by California workers, who were often unfamiliar of their rights regarding the administration of polygraph tests. Additionally, the Appellate Court observed that the California Supreme Court had also found that polygraph examinations “inherently intrude upon the constitutionally protected zone of individual privacy.” Given this statutory and judicial history, the Court concluded that violations of section 432.2 do contravene a fundamental and substantial policy. Therefore, the Court concluded that a violation of section 432.2 could support a cause of action for wrongful discharge, and affirmed the verdict in favor of McDoniel.
What McDoniel Means for Employers
This decision confirms that violations of the anti-polygraph provision of the Labor Code can result in substantial damages for employers. Moreover, claims for such violations may be brought long after they occur given the four year statute of limitations on claims for wrongful termination in violation of public policy. Employers who choose to administer polygraphs (or other similar tests) should be mindful of the need to inform employees of their rights in writing. At a minimum, employers utilizing such tests should provide this notice in a policy in the employer’s handbook. The more cautious employer will also provide separate written notice at the time of testing.
