The federal Employee Polygraph Protection Act of 1988 prohibits most private sector employers from using polygraph or lie detector tests to screen job applicants for employment or to test current employees. The act also prohibits employers from retaliating against job applicants or employees if they refuse to submit to such a test. The ban on lie detectors generally doesn't extend to federal, state, and local government employees. For example, the federal government may administer lie detector tests to certain government workers engaged in national security related activities. Certain private security firms and pharmaceutical companies are also exempt from the lie-detector ban. Generally, the only time all other private sector companies may legally administer lie detector tests is in situations where there's an ongoing investigation of a business loss. Before the lie detector test can be administered, however, the employer must state in writing the basis for why the employee is being suspected of guilt. Some states may place additional restrictions on how lie detector tests can be administered and what can be asked. If it's determined that a company has the right and the need to administer a lie-detector test, it must ensure that the testing complies with both state and federal laws. Keep in mind that the Employee Polygraph Protection Act requires all employers to post public notices informing employees of their rights under the Act.