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child abusers, so should drug companies be able to ensure that their products will not be handled by dope addicts, and other companies in our industry be able to ensure that jewelry and other valuables held in trust will not be left with thieves. For the business community, I would submit that there simply is no alternative to the reasonable and judicious use of the polygraph examination in this regard.

In the jewelry and watch industry, for example, we deal with highly valuable, concealable and easily transportable items that range from rough unfinished gems to complete products. A handful of diamonds can be worth $1 million or a salesman's watch sample case worth several hundred thousand dollars. This property does not belong to me; how do I fulfill my obligations to those who have an interest in it that access will be limited to employees who are trustworthy?

This same problem is faced by the business interests

I represent today. Should we, in making hiring decisions, engage in more expensive and intrusive private investigations and employ investigators to perform extensive background checks on job applicants, including personal interviews of their neighbors, family, friends and others? Our industries are labor intensive; in attempting to hire competent and honest employees, should we take the completed job application

at face value? The results, I am afraid, could be catastrophic for our industries.

The results would also be unfortunate in terms of
With the use of the polygraph, it is

lost job opportunities.

no longer necessary to hire only individuals whom we know personally, or who come to us through business colleagues or personal acquaintances. Instead, through the professional administration of polygraph examinations, which usually take less than one hour, we have been able to make many jobs available to segments to our society who otherwise may not have had the opportunity to obtain such employment.

We have an interest in offering meaningful job opportunities and increasing employee satisfaction. We don't want to have to limit our hiring ability. We invest significant amounts of time and effort in our hiring practices and the use of polygraph examinations in order to draw from as broad a pool as possible competent and honest individuals who will have a future with our company and our customers.

Consider, for a moment, our other alternatives in the work place. Should we hire squads of detectives and po

lice for each of our individual retail stores or should we place each of our employees with access to valuable products under constant surveillance?

Should salesmen and other

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employees who need to leave the premises with entrusted valuables be allowed to venture outside only with an escort? For our industries, these alternatives are expensive, constantly intrusive and entirely unsatisfactory when you are trying to run a business.

The use of polygraph examinations thus enables us to avoid the far more intrusive and less effective procedures in investigating and, we believe, preventing particular incidents of employee theft or other criminal conduct. It also enables employers like Zale, with respect to particular incidents, to overcome the innuendo, suspicion and doubt that usually arise as a result of such incidents and accurately to determine the source of a problem while exculpating many of our employees who have a right not to suffer job recriminations, simply because we did not have the tools to pinpoint the culprit.

This is not to say that mistakes do not occur, as
There is no ques-

they must where human judgment is a factor.
tion in my mind, however, that the relative incidence of such
mistakes is far outweighed by the benefits of the polygraph to
American business, the work force and the public that I have
briefly noted and personally experienced.

I have been fortunate, in my personal experience at Zale, not to have encountered serious problems with polygraph However, we all have been made well aware through the

use.

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press, in prior hearings on this legislation and today of

abuses concerning polygraph examinations.

Although it is my understanding that most, if not all, of this egregious conduct already is prohibited or otherwise regulated under federal or state laws, we cannot close our eyes to the fact that it exists and may require further remedial action at the federal level. At the same time, however, we need more than a knee jerk reaction -- we must have as our goal not only responsive but, more importantly, responsible legislation. That legislation does not consist, in our view, of a blanket prohibition on the use of polygraph in the employment context.

As I stated at the outset, we are here to try to find a solution. We hope that you will let the groups I repreThank you

sent work with you to strike that proper balance. for the opportunity to appear. I would be pleased to answer

any questions that the members of the Committee may have.

Mr. OSTROVSKY. Chairman Hatch, I appreciate the opportunity to address you today regarding S. 1815. My name is Robert Ostrovsky, and I am the director of industrial relations for the MGM Grand Hotel Reno.

I am here today representing the Nevada Resort Association and the Gaming Industry Association of Nevada, trade associations representing gaming licensees within the State of Nevada. The associations oppose S. 1815 and support compromise legislation which was offered in the House, H.R. 3916.

The State of Nevada has a strong licensing procedure administered by the state attorney general's office under which all examinations are conducted. This law provides for the licensing of individual examiners and restricts the type of questions which may be asked, such as matters relating to unionism, sexual relations, and other topics considered to be sensitive with regard to an individual's civil rights.

We believe this procedure is consistent with the philosophy found in H.R. 3916. The gaming industry believes that the polygraph examination has been successful in identifying numerous individuals who through later admissions and other factual analysis of accounting records, have been proven to engage in various types of theft and embezzlement.

The industry has an obligation to the public to continue to provide assurances that all wagers will receive fair and equitable odds against all other wagers. Employee theft, drug usage in the workplace, all can have a negative impact on that obligation. In addition, licensees have a duty to the taxpayers to ensure that all tax revenues are properly collected, recorded, and forwarded to the appropriate governmental agencies.

We also have an obligation under Treasury Department currency transaction reporting requirements which are enforced by Nevada gaming control regulations, which are more stringent than those applied to banks, and polygraph has proven to be a valuable tool in the enforcement of these revenue obligations. We believe that eliminating in the private sector all polygraphs based on the available information is not consistent with good public policy.

It is our belief that a more conservative approach relating to the licensing of examiners, the limitation on the type of questions that may be asked, and a limit on the use of the results of the examination, all of which are in Nevada law, are appropriate areas of consideration as a first step in eliminating any abuse which may exist in the industry.

We believe that the courts have certainly affected the use of all investigative tools in recent decisions relating to wrongful discharge and employment situations. These decisions in and of themselves have made employers more aware of their obligations relative to employee rights and employee contractual relationships. Eliminating polygraph examinations would only add a new burden on employers resulting in a potential for greater theft, drug usage, and the associated cost factors to both business and the consumer. A review of the industry statistics indicates that the device has been used cautiously and with continued concern for employee rights and has under these conditions been an informative tool in