The Sequence of Drug Testing in the Hiring Process: A Trap for the Unwary Employer

Guest editorial by: Geoffrey S. Sheldon and Brian P. Walter

In 1997, the California Supreme Court gave public employers a green light to test job applicants for drugs and alcohol in Loder v. City of Glendale, 14 Cal.4th 846 [59 Cal.Rptr.2d 696] (1997). The Court held that suspicionless drug and alcohol testing of job applicants does not violate the Fourth Amendment to the United States Constitution, the California Constitution’s privacy provision, or the California Confidentiality of Medical Information Act (“CMIA”).

While most public employers are aware that pre-employment drug testing is legal in California, many employers are either unaware or confused about when they can conduct a drug test. This can be even more confusing if an employer includes a background investigation, physical examination, or mental examination as part of the hiring process.

The recent case of Leonel v. American Airlines, Inc., 400 F.3d 709 (9th Cir. 2005) illustrates why the sequence of background investigations, medical examinations and drug testing in the hiring process can be a trap for the unwary employer. In Leonel, three HIV positive individuals applied to American Airlines for flight attendant positions. After providing written applications and participating in phone interviews, American flew them to the company’s headquarters for in-person interviews.

After the interviews, American extended a conditional offer of employment that was conditioned on the results of a background investigation and a medical examination (which included a drug test). Immediately after making the conditional offers, American representatives directed them to go to American’s medical department for medical examinations. The applicants were required to provide a medical history and blood and urine samples for testing.

Despite questions which would have revealed whether they were HIV positive, none of the applicants disclosed that they were HIV positive or that they were taking medications for their condition. However, a blood test revealed that the applicants were HIV positive. As a result, American sent letters to the applicants stating that the conditional offers were being withdrawn. The letters explained that the applicants did not fulfill all conditions in that they “failed to be candid or provide full and correct information.”

The three rejected applicants sued American alleging that its practice of conducting the medical examination (which included the drug test) before completing the background investigation violated the Americans with Disabilities Act (“ADA”) and the California Fair Employment and Housing Act (“FEHA”). Specifically, they argued that it was illegal for American to refuse to hire them for not disclosing their HIV positive status and HIV related medications because a “real” conditional job offer had not been properly made before American obtained medical information from them.

The Ninth Circuit Court of Appeals noted that the ADA and the FEHA not only bar discrimination against disabled applicants, but also regulate the sequence of employers’ hiring processes. Specifically, these statutes prohibit medical examinations and inquiries until after the employer has made a “real” job offer to an applicant. (Id. at 708 [citing 42 U.S.C. § 12112(d) and Cal. Gov. Code, § 12940(d)].) A “real” job offer under the ADA and FEHA means that the employer must have evaluated all “non-medical” information or be able to demonstrate that it could not reasonably have done so before making the conditional offer. By withholding medical information until the last stage of the hiring process, applicants can determine whether they were rejected because of disability or because of insufficient skills or bad references.

American argued that its hiring process was legal since the company first evaluated the non-medical information and only then considered the applicants’ medical condition. The Ninth Circuit disagreed, holding that medical information cannot be collected or analyzed until after all non-medical information has been evaluated, unless the non-medical information could not reasonably have been obtained. The Court noted other procedures that American could have utilized to complete the background checks prior to the medical exams, such as completing the background checks before the applicants arrived, flying the applicants back at a later date for their medical exam or having the medical exams performed by regional medical sites or the applicants’ own doctors.

However, the Court did not actually rule that American violated the statutes but rather remanded the case to the District Court for a determination of whether American Airlines can prove that it could not reasonably have completed the background checks prior to initiating the medical exams.

After Leonel, if an employer intends to do a medical examination, it should conduct its background investigation and other “non-medical” inquiries before extending a conditional officer of employment, unless the employer can demonstrate it could not have reasonably obtained the non-medical information earlier. The EEOC has indicated that a polygraph examination for a peace officer applicant may be an example of a procedure that is too costly to perform before a conditional offer is made. Another example of a procedure that might not be reasonable to perform before a conditional offer is a drug test.

While the Leonel decision clarified the sequencing of background investigations and medical examinations in the hiring process, the opinion left some ambiguity for employers with respect to the sequence of pre-employment drug testing. The reason for this ambiguity is that the Leonel Court left open whether drug testing should be treated as a “medical examination,” which only can be done post-conditional offer, or whether it should be treated as a non-medical examination which generally must be done pre-conditional offer. The answer to this nettlesome question will depend on the nature and type of testing that is being performed and whether there are “medical” inquiries or questions associated with the testing.

Under the ADA, testing designed solely to determine the current use of illegal drugs is not considered a “medical examination.” (See, 42 U.S.C. § 12114(d)(1).) Similarly, the FEHA does not treat the current use of illegal drugs as a disability, and nothing in the FEHA or any other California statute prohibits or otherwise limits testing for illegal drugs. (Cal. Gov. Code, § 12926, subd. (i)(5) and (k)(6); Loder, supra, 14 Cal.4th at 865.) If drug testing is not a medical examination, it would need to be performed pre-offer unless the test could not reasonably be performed pre-offer.

Many employers test applicants for drugs that might be legal under some circumstances but could also impair an employee’s job performance, such as prescription medications like vicodin. Since the use of legal drugs or alcohol could be considered to be a medical examination, testing for those substances may only be performed after a conditional offer has been extended. (See, EEOC’s ADA Enforcement Guidance: Preemployment Disability-Related Questions and Medical Examinations at p. 14 [cited with approval in Leonel, supra, 400 F.3d at 711).)

Whether drug testing is performed pre or post conditional offer, the EEOC is of the opinion that employers may ask follow-up questions about an applicant’s lawful drug use after an applicant tests positive for illegal drug use. (See, EEOC’s ADA Enforcement Guidance: Preemployment Disability-Related Questions and Medical Examinations at p. 9.) However, it is generally preferable to require an applicant to identify any substances that might result in a positive drug test before conducting the drug test, so that the applicant cannot later fabricate an explanation for the positive drug test. Moreover, the FEHA specifically prohibits any medical inquiry before a conditional offer has been made. Thus, if an employer wishes to conduct an effective drug test, the employer will likely need to conduct that test after a conditional offer has been made.

In the post-Leonel world, an employer should carefully plan the sequence of its hiring processes, including drug testing. An employer should also carefully consider which drugs are going to be screened in its drug tests. An employer that tests for drugs that could impair an employee’s job performance, but could also have legitimate lawful uses, such as Vicodin, will likely need to conduct the drug test after a conditional offer of employment has been made. If the employer is testing solely for drugs that are illegal under any circumstances, the testing can be performed before a conditional offer of employment is made.

Finally, an employer cannot collect or analyze any medical information from a job applicant before it makes a conditional offer of employment. Once it makes a conditional offer, it cannot collect or analyze any non-medical information unless it can prove that it could not reasonably have obtained that information prior to making the conditional offer. Thus, if an employer intends to collect any medical information from a job applicant, the conditional offer of employment serves as a critical benchmark for employers in the hiring process.

Before engaging in adopting a drug testing/medical examination policy legal counsel is advised.

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