The U.S. Supreme Court has agreed to decide whether the government violates a federal contract employee’s constitutional right to informational privacy when it (a) asks in the course of a background investigation whether the employee has received counseling or treatment for illegal drug use that has occurred within the past year, and (b) when it asks the employee’s designated references for any adverse information that may have a bearing on the employee’s suitability for employment at a federal facility, when the information obtained in both scenarios is to be used for employment purposes only and is protected under the Privacy Act, 5 U.S.C. 552a. In National Aeronautics and Space Administration v. Nelson (09-530) the U.S. Court of Appeals for the Ninth Circuit disagreed with a lower court, which had found no constitutional violations. The Ninth Circuit reversed (pdf) the district court’s decision, and ordered the entry of a preliminary injunction barring the use of the forms asking the above questions for the background checks on federal contract employees working at NASA’s Jet Propulsion Laboratory (JPL), a federal research and development facility owned by the agency. The California Institute of Technology (Caltech) operates JPL pursuant to a contract with NASA. All of the positions at JPL are filled by contract employees.

In 2005, NASA established a new agency-wide policy for the issuance of security credentials. This new policy required that all contract employees working at JPL undergo the standard background-check process called the National Agency Check with Inquiries (NACI) before receiving security credentials. The background check questions in dispute in this case are included in the NACI. In 2007, NASA modified its contract with Caltech to require that contract employees working at JPL undergo the NACI process.

Caltech and a class of contract employees brought a class action challenging the background check process on the grounds that it would violate the Fourth Amendment of the Constitution, the Privacy Act, and a constitutional right to informational privacy. The Privacy Act permits a federal agency to maintain in its records “only such information about an individual as is relevant and necessary to accomplish a purpose of the agency required to be accomplished by statute or by executive order of the President,” and, subject to certain limited exceptions, prohibits agencies from disclosing any record about an individual without the written consent of that individual.

The Ninth Circuit found that while most of the NACI questions were not problematic and were “narrowly tailored to achieve the government’s legitimate interest,” asking employees whether they have obtained treatment or counseling for prior drug use did not meet this standard. Moreover, the Ninth Circuit determined that asking the employee’s designated references whether they have any information bearing on the employee’s suitability was too broad and open-ended to be legitimate.

In response, the government takes the position that no constitutional questions or privacy issues are raised in this case, as federal contractors have reduced expectations of privacy in the employment context, especially given the long-standing and widespread use of thorough background checks, and the Privacy Act’s provisions regarding the protection and restriction on dissemination of an employee’s personal information. The government further argues that if the Supreme Court should agree with the Ninth Circuit, it would “cast a constitutional cloud over the background check process the government has used for federal civil service employees for over 50 years.”

Federal government contractors should be mindful of this issue as the Court’s decision could implicate government contracts and employment practices with respect to the permissible scope background checks of contractors’ employees.