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To Tell the Truth: Application of polygraph examinations in financial loss investigations

The polygraph, or lie detector, once a staple of financial loss probes, has been extensively constricted from use as an investigative tool for private sector employers. The Employee Polygraph Protection Act (EPPA) of 1988 greatly limits the scenarios in which polygraph examinations are permitted in loss investigations. Furthermore, a number of states, including Texas, have ruled that polygraphs are not reliable enough to be admitted as evidence.

The act requires that the employer must not only have suffered an economic loss, but also that the employee(s) selected for examination must have had direct access to the specific location where the loss was caused or occurred – and, more importantly, there must be a reasonable suspicion of involvement.

The concept of reasonable suspicion can be difficult to define. A thorough investigation of those with opportunity, combined with effective interview techniques, can be instrumental in clearing such a hurdle. However, the results may well resolve the issue and avert the prospect of asking people to submit to polygraph testing, which can cause untold damage to the morale of a company – especially to innocent parties.

One corporate client of ResultQuest requested help in testing all employees who worked on the floor where an executive came up missing an expensive piece of jewelry. We advised that such a plan appeared to be a fundamental violation of EPPA, in that the loss was to an employee, not the employer, and urged a legal consultation before proceeding. The attorney agreed. Eventually, the lost jewelry was found at the executive’s home. What if the testing had been administered?

Another key provision of EPPA is to protect employees who refuse to participate in an examination. With limited exceptions, a person generally cannot be fired or demoted solely for declining to submit to a polygraph. This makes it even more essential that a thorough investigation is carried out before asking an employee to submit to the dreaded lie detector.

The polygraph exam, by nature, is intrusive and can be stressful and humiliating to the person on the receiving end. One might argue that a thief deserves to be stressed and humiliated, but an innocent person could suffer irreparable harm that could, in turn, be costly to the employer. Consequently, its use should be implemented only in accord with legal counsel, and in strict adherence to EPPA provisions.

If you have experienced a loss that you believe merits polygraph testing, contact the specialists of ResultQuest® at 713/781-9040. We will provide skilled and measured investigative guidance.