Federated Group, a big electronics retailer, has agreed to pay $12.1 million to settle a lawsuit brought on behalf of applicants or employees who were forced to take lie-detector tests in order to get or keep a job, lawyers for the plaintiffs said Wednesday.
The class-action suit, initially brought by four unsuccessful job applicants, was brought under a 1963 California law that forbids polygraphs as a condition of employment or continued employment and under a state constitutional guarantee of the right to privacy.
The settlement, believed to be the largest involving polygraph testing, is expected to be shared by as many as 12,000 Californians who worked for or applied to Federated Group since 1983. The amount each receives will depend on a review of individual cases.
Lawyers said the case probably will not set legal precedents because it was settled without a verdict. It also will probably not have widespread ramifications for lie-detector testing because federal law bans the use of polygraphs in private employment situations, except in very specific and narrow circumstances.
However, the settlement does raise the possibility that employees or job applicants in California will now challenge as invasion of privacy the so-called honesty and psychological tests that employers are increasingly turning to in the wake of a federal ban on polygraphs, which went into effect last December.
"We think psychological tests are much more intrusive and personal. The only difference is that they don't strap you to a machine," said Brad Seligman, an Oakland attorney who represented the Federated plaintiffs.
Seligman said his law firm is close to filing a suit that will challenge a psychological test used in an employment situation.
"It will be the first major psychological test case in California under the constitutional provision," he said.
The lawyer claimed that employers have "gone too far in their hysteria over imagined and real problems."
"They are trying to buy security, but they are also degrading their employees," he said.
The Federated suit was filed in November, 1987, by Joanna Mest of Berkeley, Scott Vogel of Danville, Cynthia Marques of Santa Clara and Miriam Milgrom of Los Angeles. All had sought jobs as sales representatives or cashiers with Federated, which is based in City of Commerce and has stores throughout the state.
Two of the four were told that they failed the test, and two refused to answer personal questions, Seligman said. Questions included whether they had ever received psychological counseling, he added.
The settlement must still be approved by Alameda County Superior Court Judge Demetrios Agretelis. Seligman last year won a settlement in a similar California case against Ft. Worth, Tex.-based Color Tile, which agreed to pay $750 to $28,000 each to as many as 3,000 California employees and job applicants.
Seligman said the Federated settlement includes a provision under which the company will pay for a toll-free telephone number to help Federated employees or applicants participate in the settlement.
Federated said it ceased polygraph testing after the company was purchased last year by Atari, the Sunnyvale-based personal computer and video game company, for $67.3 million. Federated also suspended other types of written honesty and psychological tests, spokesman Greg Pratt said. He declined to comment on why the company chose to settle the lawsuit.
Chances are there will be a number of lawsuits challenging written tests under the privacy provision, said William Gould, a Stanford University law professor who specializes in labor and employment law.
"The form of the test is not relevant," he said.
However, Gould said, the success of such challenges will depend on the specific tests challenged and how invasive the questions are.
California courts have given very little guidance on the privacy issue in employment cases, said Nancy Abell, who represents employers in labor issues at the Paul, Hastings, Janofsky & Walker law firm in Los Angeles.
The case that will most likely give judicial guidance, she said, is a challenge to pre-employment drug screening at Matthew Bender, a unit of Los Angeles-based Times Mirror Co., which also owns the Los Angeles Times.
Bender applicants won a verdict in that case seeking to halt the drug tests, but it was overturned on appeal by Times Mirror. The state Supreme Court is considering an appeal by the plaintiffs.
"I believe this case will be very instructive. The issue will largely turn on what is the extent of a job applicant's right of privacy when the applicant knows what the conditions of employment are and has a choice of whether to apply for the job," Abell said.