When Marguerite Cook, an assistant manager of a Rite Aid drugstore in Maryland, refused to take a polygraph test in the wake of inventory shortages in 1980, she says she was harassed, given shorter hours and transferred to a store far from home until she quit.

Cook filed a lawsuit against Rite Aid Corp. of Harrisburg, Pa., for abusive discharge and intentional infliction of emotional distress; three other Rite Aid employes -- who, like Cook, were not accused of wrongdoing but were asked to take polygraph tests -- later joined in the case. Last year, a Baltimore Circuit Court awarded the four $5 million in damages, including $4 million to punish the company for its conduct.

When Rite Aid sought to have the verdict overturned, the Maryland Court of Special Appeals ruled that the jury could properly conclude Rite Aid's actions "went far beyond the realm of 'petty oppressions' and amounted to a complete denial of Ms. Cook's dignity as a person." The appeals court upheld the award of $1.3 million in damages to Cook, but threw out the damages awarded the other three and ordered a new trial on the amount.

Both sides are appealing that verdict now, and until the case is decided, Maryland's law on polygraph testing will remain in limbo. Even without that case, the legal status of the use of polygraphs by employers is far less clear in Maryland than in Virginia -- which allows virtually unrestricted use of the machines -- or in the District -- which essentially prohibits them.

Rite Aid won a crucial court ruling in 1981 stating that the Maryland attorney general does not have the authority to sue employers for damages on behalf of employes who claim they have suffered because of polygraph testing. Assistant Attorney General John K. Anderson said Maryland has not taken legal action against an employer since the Rite Aid case.

Maryland's lie-detector law, on the books since 1966, says: "An employer may not require or demand any applicant for employment or prospective employment, or any employe, to submit to or take a polygraph, lie-detector or similar test or examination as a condition of employment or continued employment." Also, an employer cannot fire an employe for refusing to take the test. Violation of the law is a misdemeanor, with a maximum $100 fine.

"We've got two problems in the statute," said Michael F. Brockmeyer, chief of the antitrust division of the Maryland Attorney General's office.

"One is we can't sue for money on behalf of employes; we can sue for money only on behalf of aggrieved applicants. The other problem is that the law does allow a company to ask an applicant or an employe to take a polygraph test," Brockmeyer said. "Even in the most innocent circumstances, an applicant may feel 'If I turn them down, they may not look favorably upon me.' "

Maryland officials have twice gone to court against Rite Aid, one of the most ardent advocates of polygraph use in retailing, itself one of the hotbeds of polygraphy.

Brockmeyer said the case for damages on behalf of employes was dismissed. "We had no right to damages under the statute," Brockmeyer conceded.

The second lawsuit resulted in a settlement, which included a two-year injuction barring Rite Aid from using the polygraph as a condition for employment and an offer by the company to pay restitution to a number of former employes and a current employe. Rite Aid also was monitored by Brockmeyer's office when it gave polygraph tests.

Rite Aid declined to be interviewed on any aspect of the Marguerite Cook case while the case is still in the courts.

Rite Aid Corp., which has more than 1,700 retail outlets nationally, has 101 stores in Maryland and 33 in Virginia.

Franklin Brown, senior vice president and general counsel for the company, said Rite Aid uses the polygraph for security and preemployment purposes, but never polygraphs in states where it is prohibited. "The Drug Enforcement Administration has highly recommended to companies in the prescription-drug industry that they utilize polygraph testing for security," he said.

"We, as a general policy, will give various other kinds of tests to applicants and not the polygraph examination. However, we will invite personnel to take polygraph tests in states where it is permitted where they are going to have a key to enter the store and thus have direct access to drugs. Likewise, if . . . there is a major shortage of drugs, then we will polygraph. . . . " he said.

Rite Aid recorded losses of $12 million worth of merchandise last year due to theft, he said. "The more merchandise that disappears from the stores, the more the cost of product is increased to consumers."

Cook, who was an assistant manager, was asked to take a polygraph test after shortages of general merchandise, not drugs.

When Cook refused to take the test, she was told by her supervisor that her work hours would be shortened and she would be transferred to another store. "I was a very good worker and conscious of everything, and I didn't see why I had to be lowered to undergo a polygraph. My work is better than a machine's," she said.

"I asked the supervisor, 'Why are you doing this?' and he said, 'Because you won't take the polygraph test.' "

Cook said she went into a depression. "All I did was sleep. I had my three sisters take care of my house for a year. . . . I thought I was going to have to put my three grandchildren in a foster home after it happened. It ruined my life; it did. . . . I was on medication for my nerves, and they knew that."

Lawyer Nedda Pray, who handled the Cook case along with Stephen D. Langhoff, has charged that the practice of forcing all employes to take a polygraph test when there is a shortfall in inventory is continuing.

"I have been contacted by a number of present and former Rite Aid employes who have advised me that Rite Aid continues to discharge people for failing to take the polygraph," she said.

"Designated security risk lists" still are being kept by the company and target employes to be fired for refusing to take a polygraph test, said Pray. "Any Rite Aid employe refusing to submit to polygraph testing earns a place on the security list; that employe is targeted for elimination," she said.

According to an internal attorney general's office memorandum, distributed to legislators, James Spevock, a former divisional manager for Rite Aid in the Baltimore area, testified that the company "was aware of the Maryland law and that their activities were designed to get around that law."

When there were shortages in store inventory, Rite Aid's policy was to give polygraph tests to store employes, said the memo, which was based on a deposition that Spevock gave Brockmeyer.

"If the employe decided not to take the examination, the company policy would be to force that person to leave the company," he said. Spevock identified "security lists" as a list of names of people who had refused to take the test. "Persons who went on the security list were persons who were to be forced out of the company," he said.

A bill drafted by the Department of Licensing and Regulation was introduced in 1981 to strengthen the law by allowing current employes to file complaints and to allow the attorney general to sue for money on behalf of current employes. The bill "flopped," said Anderson of the attorney general's office.

The same bill was introduced in 1982 by Delegate Isaiah Dixon Jr., and met with the same result.

Rite Aid itself tried to lobby the General Assembly to obtain an exemption to the law for drug companies, said Sen. John Pica, of the Judicial Proceedings Committee.

"Once we determined that the bill was proposed by Rite Aid and Rite Aid was its only supporter, we killed the bill," Pica said. "It was a roundabout way to attack a situation in which they had been found guilty of abuse of the polygraph." Rite Aid general counsel Franklin Brown said such exemptions for drugstore personnel are common.

The Attorney General's Office and the Baltimore City State's Attorney's Office both favor toughening the law.