U.S. RETAIL CRIME IN 1977 TOTALED AN ESTIMATED $7 BILLION, OF WHICH OVER 70 PERCENT WAS DUE TO EMPLOYEE THEFT. TO MAKE UP FOR THIS LOSS, AN EXTRA $231 BILLION IN SALES WOULD BE REQUIRED. DUE TO THIS LARGE NATIONAL ECONOMIC EFFECT, SCREENING OF JOB APPLICANTS, ESPECIALLY FOR JOBS IN RETAIL STORES, IS NECESSARY TO REDUCE THE INCIDENCE OF EMPLOYEE THEFT. IN THE CONVENIENCE STORE INDUSTRY PARTICULAR, MANY STORES HAVE ONLY ONE EMPLOYEE WHO WORKS WITHOUT SUPERVISION. THE POLYGRAPH AND PSE, WHEN PROPERLY AND PROFESSIONALLY USED, ARE EFFECTIVE INVESTIGATIVE TOOLS FOR SCREENING OUT POTENTIAL EMPLOYEES UNSUITABLE FOR POSITIONS OF TRUST. THEIR USE IS SIMILAR IN ITS EFFECT ON INDIVIDUAL RIGHTS TO THAT OF AIRPORT SEARCHES OF PASSENGERS. IN JANUARY, 1977, L'IL GENERAL STORES DEVELOPED AN INTERNAL PERSONNEL SCREENING SYSTEM TO REDUCE INVENTORY SHORTAGES AND CASH LOSSES DUE TO EMPLOYEE THEFT, AS WELL AS TURNOVER, AND TO HELP INVESTIGATE LOSSES. THE PSE EXAM IS VOLUNTARY, BUT IS A CONDITION OF EMPLOYMENT. RESULTS OF SCREENING ARE NOT MADE KNOWN TO THIRD PARTIES. THE PROGRAM PROVIDES AN ESTIMATED $3 RETURN, IN TERMS OF REDUCED INVENTORY LOSS, FOR EVERY DOLLAR SPENT. LAWS RESTRICTING USE OF POLYGRAPHS IN EMPLOYEE SCREENING WOULD PREVENT RETAIL BUSINESSES FROM PROTECTING THEMSELVES AGAINST EMPLOYEE THEFT. THE RESULT OF PASSAGE OF SUCH LEGISLATION WOULD BE ACCELERATED INFLATION AND LOSSES TO THE ECONOMY, THE PEOPLE, THE GOVERNMENT, AND NATIONAL PRESTIGE. ILLUSTRATIONS SHOWING THE FROMS USED BY L'IL GENERAL STORES FOR ITS EMPLOYEE SCREENING PROGRAM, ARE INCLUDED. (CFW)