Mass. Insurance Employers: A Hidden Trap That Could Cost You $500 Per Applicant

---

A Four-Decade-Old Law Sparks Wave of Class Action Litigation

For nearly 40 years, Massachusetts insurance industry companies have largely ignored a seemingly obscure employment law requirement. That changed dramatically in 2023 when plaintiff attorneys discovered what amounts to a litigation goldmine hiding in plain sight: mandatory lie detector disclaimers on job applications.

The stakes are higher than most insurance industry executives realize. Massachusetts General Laws Chapter 149, Section 19B doesn’t just prohibit lie detector tests in employment—it requires specific warning language on every job application. Miss this requirement, and your organization faces minimum statutory damages of $500 per violation, plus attorney’s fees and costs.

Recent federal court decisions have emboldened a new wave of class action attorneys to target Massachusetts employers across industries. CVS Health Corporation learned this lesson the hard way when it settled a class action lawsuit in July 2024 after being sued by job applicant Brendan Baker. The case has since spawned copycat lawsuits against major corporations, including Procter & Gamble.

The Legal Requirement: More Than Just Anti-Polygraph Protection

Massachusetts law casts a wider net than the federal Employee Polygraph Protection Act. While federal law primarily targets traditional polygraph testing, Massachusetts prohibits any device, mechanism, instrument, or examination designed to “assist in or enable the detection of deception” or render “a diagnostic opinion regarding the honesty of an individual.”

This broad definition has proven particularly relevant in the digital age. The CVS case centered on artificial intelligence-powered video interview technology that analyzed facial expressions, eye contact, and voice patterns to assess candidate honesty and integrity. Such AI-driven assessment tools are increasingly common in modern recruiting, including across all sectors of the Massachusetts insurance industry.

The mandatory disclaimer must appear “in clearly legible print” on all Massachusetts employment applications:

“It is unlawful in Massachusetts to require or administer a lie detector test as a condition of employment or continued employment. An employer who violates this law shall be subject to criminal penalties and civil liability.”

Criminal Penalties and Civil Exposure: A Double-Edged Sword

Massachusetts law creates both criminal liability and civil damages for violations. Criminal penalties range from $300 to $1,000 for first violations, with repeat offenses carrying fines up to $1,500 and potential 90-day imprisonment. For corporations, the statute specifically targets presidents, chief operating officers, and supervisory personnel who “allow or condone” violations.

The civil liability provisions pose the greater threat to insurance industry employers. The statute creates a private right of action allowing “any person aggrieved by a violation” to sue for:

• Injunctive relief
• Actual damages, including treble damages for lost wages and benefits
• Minimum statutory damages of $500 per violation
• Attorney’s fees and litigation costs
• Class action treatment for “similarly situated” applicants

The three-year statute of limitations and explicit class action language make these cases attractive to plaintiff attorneys operating on contingency fees.

The Enforcement Revolution: From Dormancy to Active Litigation

Until April 2023, no one had attempted to enforce the notice requirement through private litigation. The law remained a dormant provision buried in Massachusetts employment statutes. That changed when a New York class action law firm joined with a Boston firm to file the first employment application notice-based lawsuit against CVS.

U.S. District Judge Patti Saris allowed the case to proceed, rejecting CVS’s argument that applicants who merely completed applications without receiving proper notice suffered no cognizable injury. The court found that job applicants had suffered harm by participating in the hiring process without being informed of their statutory rights.

The CVS settlement opened the floodgates. The same plaintiff attorneys have since filed similar class actions against multiple companies, including Procter & Gamble, targeting the notice requirement alone—without alleging actual lie detector use.

The Auguste Precedent: A Split in Authority

The recent surge in litigation builds on evolving case law that interprets the statute’s scope. In Auguste v. G4S Secure Solutions (USA), Inc. (2016), Massachusetts Superior Court Judge Mitchell H. Kaplan ruled that the private right of action did not extend to applicants who merely completed applications lacking the required notice but were not subjected to actual lie detector testing.

However, more recent federal court decisions have reached the opposite conclusion. The split in authority creates uncertainty for employers and opportunities for creative plaintiff attorneys to test new theories of liability.

Class Action Mechanics: Why These Cases Are Particularly Dangerous

The Massachusetts statute’s structure makes it ideally suited for class action litigation:

Low Barriers to Entry: Plaintiff attorneys need only identify employers with non-compliant applications. No actual lie detector use required.

Statutory Damages: The $500 minimum per violation creates substantial aggregate exposure. An agency that processes 200 applications annually faces potential damages of $100,000 per year of non-compliance.

Fee-Shifting: Prevailing plaintiffs recover attorney’s fees, making small individual claims economically viable for class action firms.

Broad Class Definitions: Courts have accepted class definitions encompassing “all persons who applied for Massachusetts positions” during multi-year periods.

No Injury Requirement: Recent federal court decisions suggest applicants need not prove actual harm beyond the statutory violation itself.

Insurance Industry Vulnerabilities: Why Massachusetts Insurance Companies Are Prime Targets

Massachusetts insurance industry employers face particular exposure for several reasons:

High-Volume Recruiting: Insurance companies, agencies, brokerages, MGAs, claims companies, and appraisal firms regularly hire producers, adjusters, underwriters, customer service representatives, and support staff, generating substantial application volume.

Digital Application Processes: Many insurance organizations use online application systems that may lack proper Massachusetts-specific disclaimers.

Multi-State Operations: Insurance companies with operations across New England may use standardized applications that fail to meet Massachusetts requirements.

AI-Enhanced Screening: Sophisticated insurance employers increasingly use personality assessments, integrity tests, and video interview platforms that could trigger the statute’s broad “lie detector” definition.

Remote Work Implications: The law applies to “employment within the Commonwealth,” potentially covering Massachusetts residents applying for remote positions with out-of-state insurers.

Fiduciary Responsibility Focus: The insurance industry’s emphasis on trustworthiness and integrity in hiring makes organizations more likely to use assessment tools that could violate the statute.

Modern Technology Traps: When Innovation Becomes Liability

The statute’s broad definition creates unexpected pitfalls for agencies embracing modern hiring technology:

Personality Assessments: Tests measuring honesty, integrity, or trustworthiness may qualify as “lie detector tests” under Massachusetts law.

Video Interview Platforms: AI-powered analysis of facial expressions, voice patterns, or behavioral cues could trigger the statute.

Background Check Technology: Advanced screening tools that purport to assess candidate truthfulness may fall within the prohibited scope.

Integrity Testing: Traditional pre-employment integrity assessments common in insurance industry hiring may violate the statute if not properly disclosed.

Immediate Action Plan: Protecting Your Organization

Insurance industry employers should implement these compliance measures immediately:

1. Audit All Application Materials Review every job application, online portal, and recruiting platform used for Massachusetts positions. Ensure the mandatory disclaimer appears in “clearly legible print” on all materials.

2. Update Digital Systems Modify online application systems to automatically include Massachusetts-specific language for relevant positions. Consider geo-targeting based on applicant location or job location.

3. Review Hiring Technology Evaluate all pre-employment assessments, video interview platforms, and AI-powered screening tools. Determine whether any tools could be construed as “lie detector tests” under the statute’s broad definition.

4. Train Human Resources Staff Ensure HR personnel understand the law’s requirements and can identify potential compliance gaps in hiring processes.

5. Document Compliance Maintain records showing when and how the required notice was provided to each applicant. This documentation could prove crucial in defending against future litigation.

6. Review Separation Agreements Update Massachusetts employee separation agreements to include releases for potential lie detector statute claims.

Defensive Strategies: Learning from Recent Litigation

The CVS case and emerging litigation patterns suggest several defensive approaches:

Standing Challenges: While recent federal court decisions have been plaintiff-friendly, agencies may still challenge whether applicants who received no lie detector testing suffered cognizable injury from missing disclaimers.

Scope Limitations: The Auguste decision provides precedent for limiting the statute’s reach to cases involving actual lie detector use, though this approach faces increasing skepticism from federal courts.

Technology Distinctions: Insurance employers can argue that routine hiring technology falls outside the statute’s definition when tools don’t specifically target deception detection or honesty assessment.

Remote Work Boundaries: Challenge the statute’s application to positions primarily located outside Massachusetts, particularly for remote work arrangements.

The Economics of Compliance vs. Litigation Risk

For most insurance organizations, compliance costs pale in comparison to litigation exposure. Adding required disclaimer language costs virtually nothing, while defending a class action lawsuit typically requires six-figure legal expenses regardless of outcome.

Consider a mid-sized Massachusetts insurance company processing 300 job applications annually. Non-compliance creates potential exposure of $150,000 per year in statutory damages alone, before adding attorney’s fees, costs, and management time devoted to litigation defense.

Even insurance employers confident in their legal defenses face substantial costs merely responding to class action lawsuits. Recent settlements suggest that nuisance value alone often exceeds compliance costs by orders of magnitude.

Looking Forward: Trends and Predictions

The Massachusetts lie detector statute represents a broader trend toward creative employment law enforcement through class action litigation. Plaintiff attorneys are increasingly targeting technical statutory violations that create automatic damages without requiring proof of actual harm.

Insurance industry employers should expect:

Expanded Enforcement: More plaintiff firms will likely discover this litigation opportunity, increasing the volume of cases filed.

Technology Focus: Future cases will probably target AI-powered hiring tools, personality assessments, and other modern recruiting technology.

Geographic Expansion: Attorneys may test similar theories in other states with analogous lie detector prohibitions.

Settlement Pressure: The economics of class action defense may encourage more defendants to settle early, regardless of the legal merit.

Conclusion: A Simple Fix for a Costly Problem

Massachusetts insurance industry employers face a straightforward choice: spend minutes updating job applications or risk spending years defending class-action litigation. The law’s requirements are clear, compliance costs are minimal, and the potential exposure is substantial.

The recent wave of enforcement activity reflects broader changes in employment law litigation. Creative plaintiff attorneys are mining decades-old statutes for new revenue opportunities, particularly laws that create automatic damages for technical violations.

For all Massachusetts insurance employers—from major carriers to independent agencies, from MGAs to appraisal companies—the message is clear: review your hiring practices immediately, implement required disclaimers, and avoid becoming the next cautionary tale in this emerging area of employment litigation. In an industry built on risk management, this represents one of the easiest risks to eliminate.

The author acknowledges that employment law requirements can change rapidly. Insurance industry employers should consult qualified Massachusetts employment counsel for guidance specific to their operations and circumstances.