If you use polygraph tests to recruit or manage your employees, start thinking of alternatives. On December 27, 1988, a new federal law takes effect that virtually bans private-sector use of the tests.

Lie detectors will no longer be permitted as a means to prescreen job applicants. The only exceptions: applicants for security and pharmaceutical jobs. Companies will have to rely on such screens as background checks and written tests to gauge honesty.

Use of polygraph tests to investigate stealing and other infractions is permitted, but the employee must first receive a written notice stating that he or she is "reasonably" suspected of committing the infraction. The employee can refuse the test or terminate it at any time. Since the law does not define reasonable suspicion, experts advise using lie detectors sparingly to avoid lawsuits.