Concerns About Databases Of Retail Employee Thefts


On April 3, 2013, the New York Times published an article about commercial databases that contain reports from retail employers about employees who were accused of stealing from their workplaces.  Other retailers, for a fee, can use the databases when making hiring decisions.  The article discusses a number of legal attacks that have been mounted against these database providers and their reports, including one lawsuit that resulted in a multimillion-dollar settlement by a provider to resolve charges that it violated consumer protection laws.

Other potential legal issues also come to mind for both the database providers and the employers that report information to them.  One, of course, is the risk of defamation if the report/information is not accurate.  Another is potential for a discrimination claim if members of a particular protected group are disproportionately represented among the employees about whom reports are made.  A third, and less obvious, risk could be the violation of antitrust laws.  If employers band together and agree not to hire certain people, they might violate state and federal antitrust laws or state laws that broadly prohibit "black listing" employees.

The article concludes that some major retailers have stopped using the databases.

Employers who report employee thefts to a commercial database that other retailers can access will want to be scrupulously careful that the information they report is accurate.  Employers that use information from a commercial database to make employment decisions will want to be sure to comply with the requirements of the Fair Credit Reporting Act (and any mini-FCRA of their local jurisdictions).  The database providers themselves will want to be sure that the information they receive and report to other retailers is accurate, and that they too comply with the FCRA, as applicable.

Issues of employee "privacy" are hot topics today, and many members of the buying public seem to be sympathetic to the employees' side of these controversies.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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