(a) Section 7(e) of the Act provides an exemption from the general
prohibition against polygraph tests for certain armored car, security
alarm, and security guard employers. Subject to the conditions set forth
in sections 8 and 10 of the Act and Secs. 801.21, 801.22, 801.23,
801.24, 801.25, 801.26, and 801.35 of this part, section 7(e) permits
the use of polygraph tests on certain prospective employees provided
that such employers have as their primary business purpose the providing
of armored car personnel, personnel engaged in the design, installation,
and maintenance of security alarm systems, or other uniformed or
plainclothes security personnel; and provided the employer's function
includes protection of:
(1) Facilities, materials, or operations having a significant impact
on the health or safety of any State or political subdivision thereof,
or the national security of the United States, such as--
(i) Facilities engaged in the production, transmission, or
distribution of electric or nuclear power,
(ii) Public water supply facilities,
(iii) Shipments or storage of radioactive or other toxic waste
materials, and
(iv) Public transportation; or
(2) Currency, negotiable securities, precious commodities or
instruments, or proprietary information.
(b)(1) Section 7(e) permits the administration of polygraph tests
only to prospective employees. However, security service employers may
administer polygraph tests to current employees in connection with an
ongoing investigation, subject to the conditions of section 7(d) of the
Act and Sec. 801.12 of this part.
(2) The term prospective employee generally refers to an individual
who is not currently employed by and who is being considered for
employment by an employer. However, the term ``prospective employee''
also includes current employees under circumstances similar to those
discussed in paragraph (d) of Sec. 801.13 of this part, i.e., if the
employee was initially hired for a position which was not within the
exemption provided by section 7(e) of the Act, and subsequently applies
for, and is under consideration for, transfer to a position for which
pre-employment testing is permitted. Thus, for example, a security guard
may be hired for a job outside the scope of the exemption's provisions
for pre-employment polygraph testing, such as a position at a
supermarket. If subsequently this guard is under consideration for
transfer or promotion to a job at a nuclear power plant, this currently-
employed individual would be considered to be a ``prospective employee''
for purposes of this exemption, prior to such proposed transfer or
promotion. However, any adverse action which is based in part on a
polygraph test against a current employee who is considered to be a
``prospective employee'' for purposes of this exemption may be taken
only with respect to the prospective position and may not affect the
employee's employment in the current position.
(c) Section 7(e) applies to certain private employers whose
``primary business purpose'' consists of providing armored car
personnel, personnel engaged in the design, installation, and
maintenance of security alarm systems, or other uniformed or
plainclothes security personnel. Thus, the exemption is limited to firms
primarily in the business of providing such security services, and does
not apply to firms primarily in some other business who employ their own
security personnel. (For example, a utility company which employs its
own security personnel could not qualify.) In the case of diversified
firms, the term primary business purpose shall mean that at least 50% of
the employer's annual dollar volume of business is derived from the
provision of the types of security services specifically identified in
section 7(e). Where a parent corporation includes a subsidiary
corporation engaged in providing security services, the annual dollar
volume of business test is applied to the legal entity (or entities)
which is the employer, i.e., the subsidiary corporation, not the parent
corporation.
(d)(1) As used in section 7(e)(1)(A), the terms facilities,
materials, or operations having a significant impact on the health or
safety of any State or political subdivision thereof, or the national
security of the United States include protection of electric or nuclear
power plants, public water supply facilities, radioactive or other toxic
waste shipments or storage, and public transportation. These examples
are intended to be illustrative, and not exhaustive. However, the types
of ``facilities, materials, or operations'' within the scope of the
exemption are not to be construed so broadly as to include low priority
or minor security interests. The ``facilities, materials, or
operations'' in question consist only of those having a ``significant
impact'' on public health or safety, or national security. However, the
``facilities, materials, or operations'' may be either privately or
publicly owned.
(2) The specific ``facilities, materials, or operations''
contemplated by this exemption include those against which acts of
sabotage, espionage, terrorism, or other hostile, destructive, or
illegal acts could significantly impact on the general public's safety
or health, or national security. In addition to the specific examples
set forth in the Act and in paragraph (d)(1) of this section, the terms
would include:
(i) Facilities, materials, and operations owned or leased by
Federal, State, or local governments, including instrumentalities or
interstate agencies thereof, for which an authorized public official has
determined that a need for security exists, as evidenced by the
establishment of security requirements utilizing private armored car,
security alarm system, or uniformed or plainclothes security personnel,
or a combination thereof. Examples of such facilities, materials and
operations include:
(A) Government office buildings;
(B) Prisons and correction facilities;
(C) Public schools;
(D) Public libraries;
(E) Water supply;
(F) Military reservations, installations, posts, camps, arsenals,
laboratories, Government-owned and contractor operated (GOCO) or
Government-owned and Government-operated (GOGO) industrial plants, and
other similar facilities subject to the custody, jurisdiction, or
administration of any Department of Defense (DOD) component;
(ii) Commercial and industrial assets and operations which--
(A) Are protected pursuant to security requirements established in
contracts with the United States or other directives by a Federal agency
(such as those of defense contractors and researchers), including
factories, plants, buildings, or structures used for researching,
designing, testing, manufacturing, producing, processing, repairing,
assembling, storing, or distributing products or components related to
the national defense; or
(B) Are protected pursuant to security requirements imposed on
registrants under the Controlled Substances Act; or
(C) Would pose a serious threat to public health or safety in the
event of a breach of security (this would include, for example, a plant
engaged in the manufacture or processing of hazardous materials or
chemicals but
would not include a plant engaged in the manufacture of shoes);
(iii) Public and private energy and precious mineral facilities,
supplies, and reserves, including--
(A) Public or private power plants and utilities;
(B) Oil or gas refineries and storage facilities;
(C) Strategic petroleum reserves; and
(D) Major dams, such as those which provide hydroelectric power;
(iv) Major public or private transportation and communication
facilities and operations, including--
(A) Airports;
(B) Train terminals, depots, and switching and control facilities;
(C) Major bridges and tunnels;
(D) Communications centers, such as receiving and transmission
centers, and control centers;
(E) Transmission and receiving operations for radio, television, and
satellite signals; and
(F) Network computer systems containing data important to public
health and safety or national security;
(v) The Federal Reserve System and stock and commodity exchanges;
(vi) Hospitals and health research facilities;
(vii) Large public events, such as political conventions and major
parades, concerts, and sporting events; and
(viii) Large enclosed shopping centers (malls).
(3) If an employer believes that ``facilities, materials, or
operations'' which are not listed in this subsection fall within the
contemplated purview of this exemption, a request for a ruling may be
filed with the Administrator. A ruling that such ``facilities,
materials, or operations'' are included within this exemption must be
obtained prior to the administration of a polygraph test or any other
action prohibited by section 3 of the Act. It is not possible to
exhaustively account for all ``facilities, materials, or operations''
which fall within the purview of section 7(e) (1) (A). While it is
likely that additional entities may fall within the exemption's scope,
any such ``facilities, materials, or operations'' must meet the
``significant impact'' test. Thus, ``facilities, materials, or
operations'' which would be of vital importance during periods of war or
civil emergency, or whose sabotage would greatly affect the public
health or safety, could fall within the scope of the term ``significant
impact''.
(e)(1) Section 7(e)(1)(B) of the Act extends the exemption to firms
whose function includes protection of ``currency, negotiable securities,
precious commodities or instruments, or proprietary information''. These
terms collectively are construed to include assets primarily handled by
financial institutions such as banks, credit unions, savings and loan
institutions, stock and commodity exchanges, brokers, or security
dealers.
(2) The terms ``currency, negotiable securities, precious
commodities or instruments or proprietary information'' refer to assets
which are typically handled by, protected for and transported between
and among commercial and financial institutions. Services provided by
the armored car industry are thus clearly within the scope of the
exemption, as are security alarm and security guard services provided to
financial and similar institutions of the type referred to above. Also
included are the cash assets handled by casinos, racetracks, lotteries,
or other businesses where the cash constitutes the inventory or stock in
trade. Similarly, security services provided to businesses engaged in
the sale or exchange of precious commodities such as gold, silver, or
diamonds, including jewelry stores that stock such precious commodities
prior to transformation into pieces of jewelry, are also included. The
term ``proprietary information'' generally refers to business assets
such as trade secrets, manufacturing processes, research and development
data, and cost/pricing data. Security alarm or guard services provided
to protect the premises of private homes, or businesses not primarily
engaged in handling, trading, transferring, or storing currency,
negotiable securities, precious commodities or instruments, or
proprietary information, on the other hand, are normally outside the
scope of the exemption. This is true even though such places may
physically house some such assets. However, where such security alarm or
guard service is specifically designed or limited to the protection of
the types of assets identified above, whether located in businesses or
residences, or elsewhere, the security services provided are within the
scope of the exemption. For example, a security system specially
designed to protect diamonds kept in a home vault of a diamond merchant
would be within the exemption. However, a security system installed
generally to protect the premises of the home of the same merchant would
not be within the exemption. A guard sent to a client firm to secure a
restricted office in which only proprietary research data is developed
and stored is within the scope of the exemption. Another guard sent to
the same firm to protect the building entrance from unwanted intruders
is not within the scope of the exemption even though the building
contains the restricted room in which the proprietary research data is
developed and stored, since the security system is not specifically
designed to protect the proprietary information.
(f) An employer who falls within the scope of the exemption is one
``whose function includes'' protection of ``facilities, materials, or
operations'', discussed in paragraph (d) of this section or of
``currency, negotiable securities, precious commodities or instruments,
or proprietary information'' discussed in paragraph (e) of this section.
Thus, assuming that the employer has met the ``primary business
purpose'' test, as set forth in paragraph (c) of this section, the
employer's operations then must simply ``include'' protection of at
least one of the facilities within the scope of the exemption.
(g)(1) Section 7(e) (2) provides that the exemption shall not apply
if a polygraph test is administered to a prospective employee who would
not be employed to protect the ``facilities, materials, operations, or
assets'' referred to in section 7(e) (1) of the Act, and discussed in
paragraphs (d) and (e) of this section. Thus, while the exemption
applies to employers whose function ``includes'' protection of certain
facilities, employers would not be permitted to administer polygraph
tests to prospective employees who are not being employed to protect
such functions.
(2) The phrase ``employed to protect'' in section 7(e)(2) has
reference to a wide spectrum of prospective employees in the security
industry, and includes any job applicant who would likely protect the
security of any qualifying ``facilities, materials, operations, or
assets.''
(3) In many cases, it will be readily apparent that certain
positions within security companies would, by virtue of the individual's
official job duties, entail ``protection''. For example, armored car
drivers and guards, security guards, and alarm system installers and
maintenance personnel all would be employed to protect in the most
direct and literal sense of the term.
(4) The scope of the exemption is not limited, however, to those
security personnel having direct, physical access to the facilities
being protected. Various support personnel may also, as a part of their
job duties, have access to the process of providing security services
due to the position's exposure to knowledge of security plans and
operations, employee schedules, delivery schedules, and other such
activities. Where a position entails the opportunity to cause or
participate in a breach of security, an employee to be hired for the
position would also be deemed to be ``employed to protect'' the
facility.
(i) For example, in the armored car industry, the duties of
personnel other than guards and drivers may include taking customer
orders for currency and commodity transfers, issuing security badges to
guards, coordinating routes of travel and times for pick-up and
delivery, issuing access codes to customers, route planning and other
sensitive responsibilities. Similarly, in the security alarm industry,
several types of employees would have access to the process of providing
security services, such as designers of security systems, system
monitors, service technicians, and billing clerks (where they review the
system design drawings to ensure proper customer billing). In the
security industry, generally, administrative employees may have access
to customer accounts, schedules, information relating to alarm system
failures, and other security information, such as security employee
absences due to illness that create ``holes'' in a security plan.
Employees
of this type are a part of the overall security services provided by the
employer. Such employees possess the ability to affect, on an
opportunistic basis, the security of protected operations, by virtue of
the knowledge gained through their job duties.
(ii) On the other hand, there are certainly some types of employees
in the security industry who ``would not be employed to protect'' the
facilities or assets within the purview of the exemption, and who would
not be in the process of providing exempt security services. For
example, custodial and maintenance employees typically would not have
access, either directly or indirectly as a part of their job duties, to
the operations or clients of the employer. Any employee whose ``access''
to secured areas or to sensitive information is on a controlled basis,
such as by escort, would also be outside the scope of the exemption. In
cases where security service companies also provide janitorial, food and
beverage, or other services unrelated to security, the exemption would
clearly not extend to any employee considered for employment in such
activity.
(5) The phrase ``employed to protect'' includes any job applicant
who, if not hired specifically to protect the listed facilities or
assets, would likely be so employed, as through a systematic assignment
process, such as rotation of work assignments or selection from a pool
of available employees, even if selection for such work is unpredictable
or infrequent. A prospective employee whose job assignment to perform
qualifying protective functions would be made by selection from a pool
of available employees (all of whom have an equal chance of being
selected), or an employee who is to be rotated through different job
assignments which include some qualifying protective functions, is
included within the exemption. However, if there is only a remote
possibility that a prospective employee, if hired, would perform exempt
protective functions, such as on an emergency basis, or if a prospective
employee by reason of his or her position, qualifications, or level of
experience or for other reasons, would when hired, not ordinarily be
assigned to protect qualifying facilities, such an employee would be
deemed to have not been hired to protect such facilities and would be
excluded from the exemption.
(h) Polygraph tests administered pursuant to this exemption are
subject to the limitations set forth in sections 8 and 10 of the Act, as
discussed in Secs. 801.21, 801.22, 801.23, 801.24, 801.25, 801.26, and
801.35 of this part. As provided in these sections, the exemption will
apply only if certain requirements are met. Failure to satisfy any of
the specified requirements nullifies the statutory authority for
polygraph test administration and may subject the employer to the
assessment of civil money penalties and other remedial actions, as
provided for in section 6 of the Act (see subpart E, Sec. 801.42 of this
part). The administration of such tests is also subject to State or
local laws, or collective bargaining agreements, which may either
prohibit lie detectors test, or contain more restrictive provisions with
respect to polygraph testing.
