On June 23, 2023, the Texas Supreme Court held, in Houston Area Safety Council v. Mendez, that third-party laboratories do not owe a common-law duty of care to their customers’ employees for inaccurate drug tests that result in unfair job losses or other damages.
This is a great opinion for Texas businesses and companies that are involved in the collection and testing of drug samples, although it may also shut down what was possibly the last potential route of compensation in Texas for employees who are harmed by false drug test results.
Below, we will discuss Houston Area Safety Council, including:
- Previous Texas court opinions finding no liability for false drug test results in other contexts,
- Why the Court found that drug-testing labs do not owe a common-law duty to perform their services with reasonable care, and
- How the Court’s opinion may have reached the right decision for the wrong reasons.
Employee Drug Testing in Texas: Third-Party Labs Do Not Owe a Duty of Care
The plaintiff, Mendez, was a pipefitter employed by Turnaround Welding Services. Mendez provided routine hair and urine samples to the Houston Area Safety Council for drug testing, and the samples were then delivered to Psychemedics (also a defendant in the case) for testing. The test results came back positive for cocaine, although Mendez denied using cocaine and has never failed a drug test before. However, a second drug test performed by the same lab and a third drug test performed by an independent lab were negative.
Despite receiving two subsequent negative drug test results, Mendez was required to complete substance abuse counseling, after which he was cleared to return to work. Even then, Turnaround refused to employ him, and he collected unemployment for a time before finding work with a different employer.
Mendez sued Turnaround in federal court where they reached a settlement, although the court opinion does not provide the terms of the settlement. He then sued the Safety Council and Psychemedics in Texas state court.
The trial court granted summary judgment on behalf of the defendants, finding that they did not owe Mendez a duty of care, the Court of Appeals reversed the trial court, finding that the lab does owe a duty of care, and then the Texas Supreme Court reversed the Court of Appeals…
The Texas Supreme Court found that the defendants did not owe a duty of care to Mendez after analyzing the “Phillips factors” outlined in Greater Houston Transportation Co. v. Phillips, which include:
- The risk, foreseeability, and likelihood of injury,
- The social utility of the defendant’s conduct,
- The magnitude of the burden of guarding against the injury,
- The consequences of placing the burden on the defendant, and
- Whether one party would have superior knowledge of the risk or a right to control the actor who caused the harm.
Although the Texas Supreme Court has held in previous cases that no such duty exists in the context of employee drug testing, the Court has never addressed the specific question of whether a duty of care exists on the part of the third-party labs that perform the testing.
In SmithKline Beecham Corp. v. Doe, after discussing the Phillips factors, the Court held that the lab does not “owe a person tested a duty to tell that person or the employer that ingestion of certain substances will cause a positive test result” (the employee alleged that eating poppy seeds caused a false positive for opiates). They did not, however, address the question of whether the lab owed a duty of care to the person tested.
In Mission Petroleum Carriers, Inc. v. Solomon, the Court held that an employer does not owe a duty of care to an at-will employee to use reasonable care when collecting a urine sample for drug testing pursuant to DOT regulations, but the Court did not address the question of whether the lab owed a duty of care to the person tested.
Then, in Willis v. Roche Biomedical Laboratories, Inc, the Fifth Circuit Court of Appeals (correctly) predicted that the Texas Supreme Court would find that laboratories do not owe a duty of care to persons tested.
No Third-Party Liability for Employee Drug Screens is the Right Decision (Albeit for the Wrong Reasons)
Although the Court reached the correct decision, their rationale as they analyze the Phillips factors doesn’t necessarily make sense… For example, the Court explains how Psychemedic’s procedures make false positives “essentially non-existent,” a claim that is belied by the fact that Mendez’s false positive was followed by two negative results, along with his undisputed claim that he has never used cocaine and the fact that he never had a positive drug test result in his lifetime.
The Court correctly notes that there is great social utility in drug testing employees, particularly in dangerous occupations, but fails to credibly explain how a finding that drug testing labs must exercise reasonable care would negatively impact the ability of employers to continue testing their employees.
The Court repeats the defendant’s “floodgates” argument – that “imposing the duty will produce a flood of frivolous and burdensome claims against them for every employee who receives a positive test result. According to them, employees will be able to sue the collection facility or laboratory claiming that they do not do drugs, so the test result must be a false positive.” Except there is zero evidence that this claim is true, and it doesn’t reflect the facts of this case at all.
In this case, in addition to a lifetime history of no failed drug tests, Mendez promptly produced two negative drug screens, one of which was analyzed by the same lab that previously said his drug screen was positive. Who can credibly argue that an employee who promptly provides two or more negative drug screens and who has never tested positive for drugs is making a frivolous claim?
Why Was It the Right Decision?
The Court correctly points out that, although the defendants provided the false positive drug screen, it’s not the defendants’ fault the employer terminated Mendez – particularly considering the two subsequent negative drug test results and Mendez’s willingness to complete substance abuse counseling.
The Court repeats the defendants’ claim that, if they are forced to act with reasonable care when conducting drug screens, they might “transfer responsibility to employers through indemnity agreements, drastically increase the price, or choose not to collect samples for use in the employment context,” which might then result in a decline in employee drug testing, increased costs for drug screens, or employers taking control of the drug screening process, which could “erode the employment-at-will doctrine.”
In essence, the defendants are saying to the Court, “Don’t make us liable for our mistakes, or we will blow up the system,” which is a ridiculous and incredible argument both for them to make and for the Texas Supreme Court to accept.
So, why was it the right decision?
The Court may be most concerned with the impact of these claims on Texas’ employment-at-will doctrine (“[a]s we recognized in Mission Petroleum, [w]e must also balance any risk to employees against the burden it could place on our employment-at-will doctrine”), which may be a reasonable concern.
How could the Court have credibly reconciled the decision to not impose liability on negligent labs with the need to not interfere with Texas’ employment-at-will doctrine?
First of all, the Court did not need to repeat the defendants’ baseless arguments and rely on them to reach its decision. The employer’s decision to terminate Mendez may have been unreasonable, considering the subsequent negative drug screens and Mendez’s history. But that’s not the lab’s fault – the lab “corrected” its mistake with the second, negative drug screen, and the lab did not make the decision to terminate Mendez’s employment.
Presumably, there is no privity of contract between the employee tested and the lab performing the test, and, even assuming the false drug screen was due to the company’s negligence, the employer’s act of terminating the worker was an intervening cause of the plaintiff’s damages that can’t and shouldn’t be attributed to the lab.
The employer may have been liable for the wrongful termination (and there was an undisclosed settlement with the employer in federal court), except Texas is an at-will-employment state. In most cases, the employer has the right to terminate an employee for any non-discriminatory reason, even if it is based on a false assumption, and even if it is based on an inaccurate drug test result.
Regardless of how the Court arrived at its decision, it is now clear that there is no liability on the part of employers or labs in Texas for false drug screen results (apart from cases alleging malicious intent or other special circumstances).
Please feel free to contact one of our Murray Lobb attorneys to obtain our legal advice regarding employer drug-testing policies and liability in Texas. We also remain available to help you with all your general corporate, construction law, business, and estate planning needs.