Testing Well: Holding Drug Testers Accountable for False Positives

By Kevin P. Murphy

North Carolina law imposes stringent requirements on employee drug testing. But courts have long held that employers who fire employees on the basis of false positives are not liable for the employees’ harms and losses. Last week, the South Carolina Supreme Court changed all that. The Court held that laboratories owe a duty of reasonable care to the employees they are testing. Shaw v. Psychemedics Corp., No. 2017-002538 (S.C. Mar. 20, 2019). Now, wronged employees can recover directly from the labs who got them fired.

The Court recognized that these labs should be aware of the harm they cause employees by wrongly reporting positive test results. The Court agreed that these labs need to be incentives to take precautions aimed at eliminating false positives. Under pre-existing South Carolina law a wrongdoer is liable for harm to a third party arising out of his contract with another party, despite the absence of any contract between the wrongdoer and his victim.

North Carolina law is the same on this point. Our courts have found that a contract between a wrongdoer and victim is not required in order to recover against a person who negligently performs services for another and thereby injures a third party. North Carolina courts require people to act reasonably toward others in these situations depending on:

(1) the extent to which the transaction was intended to affect the other person; (2) the foreseeability of harm to him; (3) the degree of certainty that he suffered injury; (4) the closeness of the connection between the defendant’s conduct and the injury; (5) the moral blame attached to such conduct; and (6) the policy of preventing future harm.

All of these factors come out in favor of holding laboratories accountable when employees are wrongfully fired based on false positive drug test results. North Carolina will very likely follow its southern neighbor in allowing these types of claims once pressed.

Drug testing laboratories will likely respond to this ruling with indemnification agreements with employers. Employers may, in turn, require employees to sign waivers to get or keep their jobs. But waivers do not clear wrongdoers of gross negligence. Holding labs accountable will improve drug test results and help those harmed by careless laboratories. This decision will be a huge benefit to workers across the region.