Supreme Court to consider whether background checks violate privacy rights of government contract employees

Lexology.com
Proskauer Rose LLP
Katharine H Parker, Lawrence Z Lorber, Leslie E Silverman,
Paul Salvatore and Rebecca Lynne Berkebile USA March 30 2010

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).

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