Employee drug testing has always presented challenges for Massachusetts employers. Its invasive nature implicates worker privacy rights and, our courts say, limits when tests can be required, to whom, and how employers are permitted to handle results that are positive for drugs or alcohol. And then there are the questions that surround what those results demonstrate: Does every positive test mean an employee was under the influence of drugs on the job? Do employers have the legal right to terminate an employee based on an invasion of privacy that uncovers secrets about the worker’s private life?

Giving employers yet another reason for pause in this area, the U.S. Appeals Court that covers Massachusetts recently ruled not only that a group of workers can proceed with their  claims drug tests discriminated against African Americans but that they just might win it. The employees filed what’s referred to as a disparate impact lawsuit – unlike an individual claim, its focus is on how an employer’s facially neutral practice affects different racial groups. Because the employees proved that hair follicle tests yielded positive results for blacks that were about four times higher than for whites, the employees won a substantial part of their case. They claim, of course, that the positive results they experienced, which led to job loss in most of their cases, were falsely positive.  The employer, the City of Boston, will now lose the case unless its testing policy promotes its goal of identifying drug users among its police officers and no reasonable alternative to it exists.

Though private employers face less court scrutiny in the drug testing arena than do public ones, the court’s disparate impact ruling is nonetheless significant to them. Companies interested in implementing a policy should consider its implications along with other issues such as who may be tested; how a policy is implemented; testing protocols; and what they will do with employees who test positive. To be sure, drug testing of employees whose job duties implicate safety concerns remain legal in Massachusetts. Given the privacy issues they raise, however, testing programs can be costly and can expose employers to litigation regardless how well-thought-out they may be. For these reasons, they should be implemented with great care.

Forcing arbitration of employment disputes is getting easier, at least under one federal judge’s reading of Massachusetts law. Ignoring an employer’s express statements that its employment manual was “not a contract of employment” and was “intended for informational purposes only,” the court found that an arbitration clause in the manual was contractually enforceable. It ordered arbitration of the former employee’s discrimination suit even though the arbitration clause was added to the manual well after he was hired.

The court relied in large part on a 1996 Massachusetts case that permits an employment manual to become an employment contract under some circumstances. Creating contract rights requires a review of the circumstances that existed when an employee began working. In most cases since 1996,  employees and not employers have sought to enforce the terms of employment manuals. It has proved extremely difficult for them to do so, since most employers include strong disclaiming language in their manuals and most judges look skeptically on manual-as-contract claims.

Amid this backdrop, the most interesting aspect of the U.S. District Court’s decision in Daniels v. Raymours Furniture Company, Inc. ,issued on March 31, 2014, is the conclusion that a contract existed for arbitration purposes despite the sort of express disclaimer language often held up by employers to defeat employees’ claims to contractual manual rights. The Daniels decision may thus represent another example of the general policy in favor of arbitration over other forms of dispute resolution. In 2009, e.g., the Massachusetts Supreme Judicial Court held that discrimination suits under Mass. Gen. L. ch. 151B can be forcibly arbitrated. In 2013, it concluded that an employee can waive his/her right to pursue class action litigation in an arbitration clause. Both decisions and the one by the U.S. District Court are helpful to employers, who often prefer the relative simplicity and finality of arbitration over trials at the Massachusetts Commission Against Discrimination (MCAD) or in courtrooms.