(FORTUNE Magazine) – And can he fire you if he finds out? The broad answer is no. By federal law, health records must be kept separate from the rest of your personnel file. Your physical condition cannot be grounds for dismissal so long as you can perform your job. The secrecy of an employee's health record is one area in which workplace privacy seems more secure than ever. That corrects a long tradition. Many employers automatically turned away candidates with disabilities, even one so subtle it could be detected only from medical records. The handicapped have been so discriminated against that their unemployment statistics are staggering. In 1990 some 58% of handicapped men of working age and 80% of women had no jobs, although only a minority were totally incapacitated. For the employer, of course, confidentiality means a higher risk of hiring and assuming responsibility for a worker with AIDS, degenerative heart disease, or some other calamitous and expensive illness. What has swung the balance to the employee is the Americans With Disabilities Act. In effect for close to a year, the ADA sets hiring and firing rules for companies with more than 25 employees; those with as few as 15 employees will be included by mid-1994. Start with the arrival of the job candidate for the interview. The employer may not request the candidate to undergo a comprehensive medical exam. Drug tests are permitted, and any sign that the candidate has been using controlled substances is legitimate reason for tossing his resume. ''However, it's not allowed to ask if someone has had an alcohol problem,'' notes Mark Rothstein, a University of Houston authority on the reach of the ADA. So there's no probing for the drug that's most prevalent and perhaps most dangerous. A suspicious employer is not likely to learn much from the applicant's last boss, except dates of employment and positions. It is not illegal to reveal more, but the applicant could sue for defamation and collect if the previous employer cannot prove its case. Insurance companies routinely exchange information about patients. What happens if the prospective employer asks the company health insurer if there's any reason not to hire Social Security number 043-28-8744? The insurer too can be sued for simply answering yes. After the employer offers a job to the candidate, he can make it conditional upon passing a physical exam. But the employer may rescind the offer only if the physical turns up a defect that prevents the newcomer from doing the job. A curvature of the spine, for example, might be a handicap on the loading dock, but progressive diabetes won't prevent someone from evaluating loan applications -- at least not tomorrow. The law doesn't concern itself with whether the apprentice will be effective in a year or so. It also ignores the problems of deteriorating health, missed workdays, and rising medical bills. Before passage of the ADA, some employers avoided those expenses by abruptly cancelling their health insurance policies and substituting contracts that exclude particular ailments. When H&H Music, a retail chain in Houston, for instance, learned in 1988 that an employee had AIDS, it switched to an insurance plan that put a $5,000 lifetime cap on benefits for an AIDS patient while retaining the $1 million maximum for those who suffered from other diseases. The courts upheld H&H. Such maneuvers may soon be impossible. In June the Equal Employment Opportunity Commission said it would argue the protection of ADA to win medical benefits for Terrence P. Donaghey Jr., 34, a former New York City construction worker. Donaghey, who needs treatment for sickness brought on by his HIV-positive condition, thought he was covered by his labor union (Mason Tenders Local 23) health plan. But the union quietly changed its policy a year ago to eliminate reimbursements for AIDS. Donaghey and the EEOC claim discrimination and are suing the union. Denying a worker benefits for AIDS or other catastrophic illness seems cruel. Yet it seems equally unfair to burden a small employer or union with responsibility. Such calamities can cost insurance companies and, ultimately, the insured workers $500,000 or more, and the health insurer might cancel the employer's policy the following year or raise the premiums out of reach. Add the ADA to the long list of reasons why it's high time for health care reform.