• Supreme Court to Consider Whether Background Checks Violate Privacy Rights of Government Contract Employees
  • April 9, 2010 | Authors: Rebecca L. Berkebile; Lawrence Z. Lorber; Katharine H. Parker; Paul Salvatore; Leslie E. Silverman
  • Law Firm: Proskauer Rose LLP - New York Office
  • On March 8, 2010, the United States Supreme Court granted certiorari in NASA v. Nelson, agreeing to consider whether the National Aeronautics and Space Administration violated the constitutional rights of certain contract employees in non-sensitive positions by conducting extensive background checks on them. 

    Background

    In 2005, NASA began requiring even “low-risk” contract employees to undergo a comprehensive background investigation that asks workers a variety of personal questions, including questions about conviction history and drug treatment. 

    A group of contract workers at NASA’s Jet Propulsion Laboratory, operated by the California Institute of Technology (Caltech) under a contract with the federal government, on behalf of a potential class of 9,000 employees, filed suit to enjoin the conducting of the background investigations. The employees claimed the background checks violated their constitutional right to informational privacy and that the questions were not reasonably tailored to their responsibilities and level of access to confidential government information.

    The district court denied the employees’ motion for a preliminary injunction, but the Ninth Circuit Court of Appeals reversed, finding that the background checks had the potential to violate employees’ right to informational privacy and that certain questions posed to the employees and their references were not narrowly tailored to meet the government’s legitimate interests. 

    The Ninth Circuit also addressed the question of whether Caltech, as a private actor, could be held liable for constitutional violations that arise from the government-imposed background investigations. The court found that although there is a presumption that private conduct does not constitute government action, that presumption is rebutted when a sufficient nexus makes it fair to attribute liability to a private employer as a government actor. The Ninth Circuit found that Caltech could face liability because it did more than merely abide by the contract terms imposed by NASA. Although Caltech initially opposed NASA’s background checks, it later established a policy that employees who did not cooperate with the investigation and failed to obtain federal identification badges would be deemed to have resigned from Caltech (as opposed to merely being denied access to the Jet Propulsion Laboratory). 

    The Ninth Circuit noted that this decision raises serious questions as to whether Caltech became a willful and joint participant in NASA’s investigation program, creating a coercive environment in which employees must choose between their jobs or their constitutional rights. 

    The government petitioned the U.S. Supreme Court to review the Ninth Circuit’s decision. The petition was granted on March 8, 2010, and hearing is scheduled for the fall term.

    While focused on constitutional issues, the decision in this case may nevertheless have broader significance insofar as the court addresses the appropriate scope of background checks, which are widely conducted by many employers. It will also have significance to government contractors to the extent it addresses the standard under which a contractor becomes an agent or arm of the state, subject to liability as a state-actor for violation of constitutionally protected rights.