STATEMENT OF THE NATIONAL GROCERS ASSOCIATION

Introduction. The National Grocers Association (N.G.A.) takes this opportunity to submit the views and position of its retail grocers and food wholesaler members on S. 1815, the Polygraph Protection Act of 1985. The N.G.A. represents the independent sector of the food distribution industry, including over 2,000 retail grocery firms and 60 wholesale distribution companies. N.G.A.'s retail members operate convenience stores, supermarkets and superstores. N.G.A.'s sixty wholesale food distribution centers distribute food and grocery products to retail grocers in all 50 states.

Retail grocery and food wholesaling businesses are characterized by a high dollar volume of inventory, and a high number of annual inventory turns. In 1985 food retailing had annual sales of over $292 billion in consumer products and an average industry net profit margin of approximately 1.5 percent.

In low profit, labor intensive industries, such as food retailing and wholesaling, the employee serves as a key component in assuring successful business operations. As an industry, the food distribution's employee work force is known for its high efficiency, productivity and customer service. N.G.A. members constantly work to encourage a spirit of trust, cooperation and customer service at all levels of their work force. A recent Gallup Poll showed that supermarkets earned the highest ratings of customer satisfaction when compared to other service industries.

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However, it is a fact of life that there are unfortunate incidents, involving internal theft, drug abuse, and other criminal acts, when an individual can do substantial harm to a company. It is just such incidents which have led retail grocers and food wholesalers to use the polygraph as part of an overall effort to promote employee honesty and protect the assets of their company.

As the debate on the proper use of polygraph tests in the private sector continues in the United States Senate, food retailers and wholesalers oppose S.1815's complete ban on private sector employers' right to use polygraph tests, and encourage Senators to seek an appropriate balance between the rights of individuals and those of private sector employers. Perhaps this was best said by one of N.G.A. 's Nebraska retailers:

"At a time when so many businesses are hard pressed to make a profit it becomes more important to have honest employees.

We are in the retail grocery business and profits are very slim. We must guard against shoplifting as well as internal theft. One of the ways of guarding against internal theft is by giving prospective employees a polygraph test before hiring and at future periods through their employment. It is estimated that 50% of retailers' shrinkage comes from internal theft.

The polygraph test results in hiring better quality employees and also makes for better morale because employees are working with honest people and if losses do occur the honest employee is exonerated.

We realize polygraph tests are not perfect, but are one of the best tools available. We only wish to know the employees are honest, do not have a drug problem, or drinking problem.

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We use only licensed polygraphers and the rights of the individual are protected. We must not overlook the rights of honest individuals to work with honest and decent people. I urge you (Congress) to please not take away this tool of management to screen out the dishonest employees."

S. 1815- The Polygraph Protection Act of 1985. S. 1815 would prohibit the use of lie detectors by private employers, with limited exceptions, as one tool for pre-employment screening, or in discharging, dismissing or disciplining an employee. The prohibition against the use of lie detectors would include polygraphs, deceptographs, voice stress analyzers, psychological stress evaluators, or any similar device using mechanical, electrical or chemical methods as a truth verifier.

It is important to note that S. 1815 would permit the use of polygraph tests by the United States Government, a state government, city, or other political subdivision. As an exception to the ban on private employer use, personnel of Department of Defense contractors with access to classified information could be subjected to polygraph examinations as well. S. 1815 would preempt all current state regulations.

In introducing S. 1815, Senator Hatch noted that the bill attempts to strike a legitimate balance between governmental needs and the rights of working men and women. He also stated that the bill as introduced does not address arguments from employers that polygraph tests are the only effective means at their disposal for assertaining the veracity of employment applications, locating drug or similar types of abuse among employees or rooting out crime in their work force.

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It is specifically for that reason that it is now time for the Senate to focus on the need to strike a legitimate balance between the needs of private sector employers and the rights of working men and women. Private employers should be permitted the use of "lie detectors" the same as federal, state, and local governments. There should not be a double standard.

State Regulation.

Currently 31 states and the District of Columbia have

regulated the use of polygraph tests by employers. Clearly, many states have struck a balance on behalf of private employers, such as food retailers and wholesalers, to use polygraphs as a legitimate tool in detecting internal theft, drug theft problems, and other illegitimate employee activities. N.G.A. members feel strongly, that the states have determined, that there is a legitimate place for polygraph testing as one tool in employment decisionmaking. Federal legislators who desire to create uniformity in state regulations, should not do so by an outright prohibition. A more balanced approach would be to establish uniform guidelines and minimum standards built upon present state regulations.

Grocery Distribution Industry. Food retailers and wholesalers employ millions of full-time and part-time employees to assure the efficient and safe distribution of food, drug, and other grocery related products to consumers. The industry handles a high dollar volume of consumer products, substantial amounts of cash and checks, and has a net profit margin of approximately 1 percent. Food retailers and wholesalers have a necessary business incentive

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to assure the integrity and honesty of their work force. It is important to protect against internal theft of consumer products, drug theft, embezzlement, and other misappropriation of funds.

According to the Sparagowski report on "shrinkage" 65% of thefts from retail establishments are attributable to employee theft. Placed in the context of the fact that the retail industry alone suffers $10 billion in losses from employee theft every year the magnitude of the problem becomes compelling.

In an industry with an annual profit margin of approximately 1% it is impossible for food retailers to absorb such losses and it unnecessarily adds to the cost of food. Estimates are that internal theft can increase consumer prices as much as 15%.

The Drug Enforcement Administration reports that there are approximately 10,000 thefts of drugs and controlled substances each year. Fifteen percent of these drug related thefts are reported to come from employee theft. Food retailers frequently have pharmacies in their stores, and wholesalers frequently handle drug products as distributors.

Recent incidents of product tampering have increased public and inustry concern for assuring consumer safety in the consumption of food and drug products. The need to maintain the integrity and safety of America's food