U.S. Supreme Court Holds that Constitutional Privacy Rights Do Not Restrict the Government's Discretion to Background Check Federal Contractors

In NASA v. Nelson, 09-530 (Jan. 12, 2011), the U.S. Supreme Court rejected a constitutional challenge to the collection of certain background information by the U.S. Government as part of the process of credentialing federal contractors. The Court's decision acknowledges the legitimate interest that the Government has as an owner and employer in vetting workers. Because private sector employers plainly have the same interest in "employing a competent, reliable workforce" and "separating strong candidates from weak ones," the Court's decision may prove useful to private sector employers at a time when background checks are under heavy fire from groups such as the Equal Employment Opportunity Commission (EEOC) and state legislatures. That said, the Court's decision does not give public or private sector employers carte blanche to engage in background checks of direct or contingent workers. The Court's decision was limited to a consideration of federal constitutional privacy rights, and did not consider the various laws that regulate the collection and use of background information by private sector employers, including the Fair Credit Reporting Act (FCRA) and Title VII of the Civil Rights Act of 1964 (as interpreted by the EEOC).

Facts

The suit in question was brought by 28 contract employees who worked for NASA's Jet Propulsion Laboratory in California, which was operated by the California Institute of Technology under a government contract. During the contract workers' employment, a Presidential Order was issued that resulted in a requirement that all contract employees undergo a background check entitled the National Agency Check with Inquiries (NACI), which is the standard background investigation used for prospective civil servants. Following the Presidential Order, NASA modified its contract with the California Institute of Technology to require that it comply with the new background check requirement. As a result, the California Institute of Technology informed the Lab employees that anyone failing to complete the new background check process by a certain date would be subject to termination.

Among other things, the NACI background investigation requires employees to answer whether they have used, possessed, supplied or manufactured illegal drugs in the past year, and, if so, to provide further details, including whether they have received any treatment or counseling. The NACI background investigation also includes a reference check...