A drug testing company may be liable for negligence if a worker is damaged in employment as a result of a botched test, the South Carolina Supreme Court has ruled.

In a unanimous decision, the justices held that a drug testing laboratory that has a contract to an employer to conduct drug tests owes a duty of care to the employees such that an employee could have a claim of negligence against the drug testing laboratory.

The court’s ruling answers a certified question from the U.S. District Court in a lawsuit brought by a former employee of an auto manufacturer that raised an issue of state law that had never been addressed by the South Carolina Supreme Court.

The plaintiff was terminated after Psychemedics Corp. reported two positive drug tests to the employer. Psychemedics had a contract with the manufacturer to perform random drug testing, and in two separate tests, it reported that Shaw’s hair sample tested positive for illegal substances. Shaw had a negative test from an independent lab, but the manufacturer would not accept that result. Following the second positive Psychemedics test, Shaw was terminated.

Shaw’s federal court suit against Psychemedics asserts claims of negligence and negligent supervision.

Responding to a question certified by the trial court, the South Carolina Supreme Court found that the lab owes a duty of care to the employee being tested even though the contractual relationship is between the lab and the employer. The court reasoned that such a duty exists because it is foreseeable that the tested employee will suffer a direct economic loss if he loses employment because of the results provided by the lab based on a negligently performed test.

The court explored the public policy reasons for recognizing the duty of care owed by a drug testing laboratory to the tested employee, including the lack of control an employee has over the testing procedures, the immediate consequences suffered by a terminated employee and the possible future harm to an employee who has a positive drug test and subsequent termination in his prior work history.

If such a duty were not recognized, a terminated employee would have no method of recourse, the court found, especially if the employee was an at-will employee. Finally, the court held that the policy goal of deterrence favored the recognition of this duty of care.

It has always been crucial for drug testing companies to meet the standard of care when conducting these tests. Now that the South Carolina Supreme Court has specifically recognized this cause of action, however, it is a good time for drug testing companies to redouble their efforts.