Employers walk fine line between workers' privacy and safety

September 05, 1994|By Bloomberg Business News

ANCHORAGE, Alaska -- The Exxon Corp. Valdez oil spill happened five years ago, but its effects are still being felt -- even in some ways having nothing to do with the environment.

Take worker privacy, for example. The accident occurred on the watch of Valdez captain Joseph Hazelwood, who had been drinking. With an Alaska jury deciding last week whether Exxon should pay as much as $20 billion in punitive damages to those hurt by the spill, companies aren't likely anymore to let an employee's private life go unnoticed.

"If you've got a pickup driver hauling something for you and smoking marijuana and he plows into a school bus, they're going to come after you," said Lee Paterson, a Los Angeles employment law attorney.

But companies have a thin line to walk in trying to find out which employees could expose them to liability. Civil rights laws limit how much firms can investigate their workers. And even if the government doesn't prosecute, employees might strike back by suing.

For example, when Kmart Corp. suspected a drug-and-theft ring was operating at its Manteno, Ill., distribution center, it hired private investigators to pose as Kmart employees and befriend the workers there.

Workers, tipped off that their conversations at various social occasions were being used as fodder in reports to their superiors at Kmart, sued the company in September for invasion of privacy.

Kmart admitted hiring investigators, but said the use of illegal drugs during work hours jeopardized employee safety -- the workers operated forklifts and packaging machinery. The case is pending in Circuit Court in Cook County, Ill.

Even if such employee suits fail, they can cost the company time and money. In 1982, Nabors Alaska Drilling Co., an Anchorage oil company, gave a surprise drug test to a driller during a physical exam for an offshore assignment. The test revealed traces of marijuana, and the driller was suspended. Under company policy, he had to be retested twice before returning to work. He was fired after refusing more tests, then sued for invasion of privacy. Nabors Alaska won, but it took five years and $100,000 in legal fees.

Investigating employees' peccadilloes leads to the question of how a company should react to what it finds. In the first phase of the Exxon trial, the oil company admitted that it discovered four years before the March 24, 1989, accident that Mr. Hazelwood had an alcohol problem. The skipper underwent treatment, but was later arrested for driving under the influence.

Exxon contended it had no way of knowing whether Mr. Hazelwood's alcohol problem continued after his rehabilitation. Nevertheless, the captain's drinking became a major issue in the trial.

The jurors never revealed whether they found Exxon guilty of reckless negligence because of Mr. Hazelwood's bent for drink. But attorneys say the verdict could nonetheless expose companies to more liability for their employees. Exxon already has paid $2.5 billion in cleanup costs and fines, and that will grow to $2.8 billion after claims for actual damages are paid.

The Exxon verdict "could have tremendous repercussions for all corporations," said Mike Chalos, Mr. Hazelwood's attorney. "I think it would be a terrible thing from a policy standpoint for a company to be held recklessly liable because it put somebody who has undergone alcohol rehabilitation back to work."

Exxon, for one, will no longer take that risk. After the spill, the company changed its policy, and no longer allows employees who have undergone alcohol or drug treatment to return to safety-sensitive positions.

The policy change has led to 106 lawsuits against Exxon, Chairman Lee Raymond said in testimony at the recent Exxon trial. But he said Exxon plans to keep the policy because of the risk involved.

Many companies have tried to screen out liability problems by expanding background checks of prospective employees to include not just criminal histories, but credit, motor vehicle and civil litigation records. It's illegal to inquire about an employee's medical history, which includes substance abuse records. But it's easy enough to get such information without directly asking the person.

For one thing, companies can require prospective employees to undergo medical exams. And after the person has been hired, medical records often pass through human resources offices and can be read by managers throughout the company, said Pam Wear, former executive director of the American Health Information Management Association.

In addition, companies often hear from medical insurers when an employee develops a pattern of certain complaints. Such information might lead managers to inquire further, Ms. Wear said.

Then, there's always the more direct approach: random drug and alcohol tests. Civil rights organizations have fought the tests as an invasion of privacy, but state courts have repeatedly upheld them.

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