Dive Brief:
- Sterling Infosystems, a consumer reporting agency that sells background checks, falsely reported to a prospective employer that a job candidate had a criminal history and an active warrant for her arrest, the candidate alleged in a Nov. 26 lawsuit (Miller v. Sterling Infosystems, Inc.).
- Per the complaint, the job candidate was given a conditional offer to work as a restaurant cook for Great Wolf Lodge in Perryville, Maryland. After Great Wolf received the report, it rescinded her job offer and told her she would have to dispute the inaccuracies directly with Sterling, the lawsuit alleged. She did, and Sterling investigated and sent Great Wolf a corrected report, according to the complaint. The job candidate reapplied and was given another start date.
- She sued Sterling, alleging it violated the Fair Credit Reporting Act by failing to follow reasonable procedures to assure maximum possible accuracy. “Had Defendant performed even a cursory review of public court records,” it would have discovered the record it sent Great Wolf belonged to a different person, who is a different race, has a different address and, unlike the job candidate, doesn’t have a middle name, the lawsuit stated.
Dive Insight:
First Advantage, Sterling Infosystem’s parent company, told HR Dive in an email that it “declines to comment per company policy regarding pending litigation.” A representative for Great Wolf stated in an email that it wasn’t “appropriate to comment given this is not really a matter in which we’re directly involved.”
Almost all employers conduct at least one type of employment background screening, according a Consumer Financial Protection Bureau report cited in the complaint.
General background checks can help verify information, such as a candidate’s education, certifications, past employment and whether they were truthful during an interview, Venable attorneys pointed out in a 2023 analysis.
Criminal background checks can reveal risks like theft, workplace violence or workplace substance abuse, attorneys for Jackson Lewis noted in a blog post from July.
But their accuracy has been called into question. Authors of a study published in a February edition of Criminology found “lots of inaccuracies and mistakes” in criminal background check reports compiled by private companies.
The complaint against Sterling explains: “Criminal background checks are generally created by running automated searches through giant databases of aggregated criminal record data.” Private consumer reporting agencies typically purchase the information in bulk or scrape it from court websites and create and disseminate reports with little or no manual review, the lawsuit asserted.
That’s important because data aggregation techniques that rely on names and birth dates, rather than unique identifiers like fingerprints, are imperfect, authors of the Criminology study said.
The Miller complaint alleged appropriate review would have included looking at public and widely available Maryland court records under the identified case number regarding the criminal record at issue.
For consumer reporting agencies, alleged failure to engage in a reasonable review of criminal history records may open them up to FCRA lawsuits, as recent claims against ADP show.
For example, in September, a job candidate in Texas sued ADP, alleging it caused him to lose out on a job offer after falsely reporting to a prospective employer that he had been convicted of a first-degree felony.
In July, ADP settled a lawsuit alleging its background check incorrectly reported that a job seeker was a convicted murderer. The report listed the job seeker’s name as an alias for an incarcerated individual convicted of murder, the complaint, filed in December 2023, alleged.
FCRA requirements include certain notice procedures, such as telling an employee in writing the employer might use collected background information to make a decision about their employment, a joint guidance from the Federal Trade Commission and the U.S. Equal Employment Opportunity Commission explains.
Also, before an employer takes adverse action based on a report, it must give the applicant or employee notice, as well as a copy of the background report and a summary of rights it should have received from the company that sold it the report.
“By giving the person the notice in advance, the person has an opportunity to review the report and explain any negative information,” the guidance states.
