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Improper Background Checks and Inaccurate Information Grounds For Lawsuit

June 21, 2011

Improper Background Checks and Inaccurate Information Grounds For Lawsuit

Reports have been coming in of improper background checks being conducted by various companies. Not only have the background checks produced false information but have also been conducted in unacceptable ways, such as failing to give employees sufficient notice of adverse action taken because of such checks and generating hurdles, which prevent workers from contesting reports. LexisNexis Risk Management Inc. has been among the accused in a recent lawsuit that resulted in a class-action settlement exceeding $20 million.
LexisNexis was the checking agency used by a Newport News call center known as Telespectrum, which required background checks for all employees. After 40 employees were fired upon the discovery of criminal records, it came to light that many of the reports were erroneous. In one instance, a woman was confused with another woman in a different state who happened to share the same name, resulting in a record that mistakenly listed convictions for prostitution among other crimes. Such reporting flaws seem to be common as studies by Public Interest Research Groups reveal a prevalence of errors on such reports.
However, the lawsuit’s focal point was not the production of inaccurate information but a problem of lack of notice. Under the Fair Credit Reporting Act, users of the information for credit, insurance, or employment purposes must provide employees with an initial notice of an adverse action taken because of such a report no more than a day after an employer does. In the event of a firing, employees are to receive the full report a minimum of five business days prior to their termination. Likewise, users must identify the company who provided the report. Such regulations are in place to allow the consumer to verify or contest the accuracy of such a report. In the case concerning the LexisNexis, employees did not receive notice of negative reports until 10+ days after the employer did in some instances, and did not receive full reports until being let go.
To make matters worse, before investigating any claim of a flawed report, LexisNexis required employees to provide two types of identification. This hurdle coupled with the lack of notice, disallowed any chance an employee might have of correcting such a reporting error. Failure on the part of LexisNexis to abide by the protocols established by the Fair Credit Reporting Act, has thus resulted in a proposed settlement agreement of $20.7 million. Last April in Richmond, Virginia, U.S. District Judge Robert Payne issued a preliminary approval of the settlement and set a hearing for final approval this month. A detailed summary of your rights under the Fair Credit Reporting Act can be found here.
Background-Checks Settlement Would Divvy Up $20.7 Million
Fair Credit Reporting Act
Posted By: Eston Whiteside