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Hodge v. Texaco Inc., U.S. Court of Appeals for the Fifth Circuit (975 F.2d 1093), Decided 1992
Decision: Workplace drug test reports are included under the Fair Credit Reporting Act (FCRA) since they bear on an individual’s personal characteristics and are used to determine his/her eligibility for employment. However:
- A drug testing lab report falls under the “transactions and experiences” exception and is not a “consumer report” under the FCRA; and
- A drug rehabilitation counselor’s report to the employer is excluded from coverage because he/she does not fit the definition of a “consumer reporting agency.”
Background: Hodge instituted a claim for violation of the notice and disclosure provisions of the FCRA after being discharged for failing a drug test required by his employer, Texaco.
The employee brought the action against his employer, the laboratory which issued the urinalysis report, and the drug rehabilitation counselor who assisted the employer in forwarding the employee’s sample to a laboratory and reporting the test results back to the employer.
The employee contended that the urinalysis report was a “consumer report” under the FCRA because it was used to determine his eligibility for employment, and that the laboratory and drug rehabilitation counselor were “consumer reporting agencies” which violated the FCRA by failing to use reasonable procedures to guarantee maximum possible accuracy in their “consumer reports.” The employee further contended that his employer violated the FCRA by failing to disclose the name and address of the drug testing laboratories when it terminated him.
The FCRA requires “consumer reporting agencies” to follow certain procedures when releasing “consumer reports” in order to ensure accuracy and to prevent unreasonable or careless invasion of consumer privacy. The term “consumer reporting agency” is defined by the FCRA as follows:
“… any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.” (15 U.S.C. §1681a(f))
The FCRA defines a “consumer report” as follows:
“…any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used … for the purpose of serving as a factor in establishing the consumer’s eligibility for … (2) employment purposes ….” (15 U.S.C. §1681a(d))
Court’s Opinion: Analyzing the applicability of the FCRA to drug test results, the United States Court of Appeals for the Fifth Circuit found that nothing in the FCRA precluded the coverage of medical-type reports such as urinalysis reports, since the FCRA’s coverage applied not only to credit reports, but also to other types of reports which have a bearing on a consumer’s employment eligibility, even though they do not directly relate to credit information.
The court concluded that workplace drug test reports are included under the FCRA, since they bear on an individual’s personal characteristics and are used to determine his/her eligibility for employment. As a result, agencies responsible for reporting such information are required to ensure their utmost accuracy.
The FCRA does, however, exclude from its coverage “any report containing information solely as to transactions or experiences between the consumer and the person making the report.” (§1681a(d)(A)) This exclusion exempts reports that are based solely upon the reporter’s first-hand experience with the subject.
The FCRA’s interpretative guidelines state that, as long as the report is not based on information from an outside source, but rather, solely on the reporter’s own first-hand investigation of the subject, the report will fall within this “transactions and experiences” exception.
The court found that the report generated by the laboratory fell under the “transactions and experiences” exception and was not a “consumer report” because the lab merely reported the results of its scientific testing of the employee’s urine sample.
It did not matter that the urine sample was first collected by another company, since the lab did not rely upon information provided by the collection source in producing its report, nor did it matter that the lab had no personal contact with the employee.
The court also found that the drug rehabilitation counselor’s report to the employer was excluded from coverage because he did not fit the definition of a “consumer reporting agency.”
The counselor’s only involvement with the drug test result was a one-time referral to the laboratory performing a confirmatory retest and a report to the employer confirming the positive test result, both of which arose out of his relationship with the employer at the time. The court held that in order to be considered a “consumer reporting agency,” an individual or organization must regularly engage in the collection of information; it is not enough that he engage in such activities on a casual, one-time basis. As a result, the court determined that the FCRA did not govern the counselor’s actions.
Based upon this case, any agency or individual that regularly engages in reporting drug test results to a third party may be subject to the FCRA, particularly when such reports are based upon more than first-hand knowledge and experience with the subject of the report. This means that the compliance procedures outlined in the FCRA must be followed.
Note that Congress amended the Fair Credit Reporting Act in October 1997 and November 1998, in part to expand an employer’s obligation to employees and prospective employees.