Rite Aid, Background Checks, and Applicants' Rights

It’s becoming more and more common for retailers and other businesses to carry out background checks when hiring new employees. Retailers, increasingly cautious following 9/11, now routinely check applicants’ criminal records, past employment, and even request statements from friends and family to vouch for a person’s character. The process has spawned a vast and lucrative business, although background check companies collect and provide information to retailers with sometimes questionable accuracy. More than half of the United States’ 100 largest companies use the same services, and a negative report from a previous employer can stop an individual’s job application in its tracks – whether the report is true or not.

The cases are related because the harm alleged to have been sustained by both putative classes stems from the same facts.

Rite Aid is facing a class action lawsuit currently accusing the company of violating the Fair Credit Reporting Act by using consumer reports as part of its background checks without supplying applicants with a copy, or offering them a chance to refute the reports. Lead plaintiff Kyra Moore alleges that the company uses reports generated by LexisNexis, detailing past incidents of retail theft, and often takes action based upon the content without allowing applicants to state their case. As part of the complaint, plaintiffs designated the case as related to a similar suit from May 2011, which again accused LexisNexis of violating FCRA regulations.

Rite Aid recently attempted to have this designation struck. A Pennsylvania judge ruled, however, to dismiss the company’s request.

U.S. District Judge Jan DuBois, denying the company’s motion, ruled that “the cases are related because the harm alleged to have been sustained by both putative classes stems from the same facts — the use of LexisNexis’ employment adjudication services and whether such conduct violates the FCRA.”

The related class action, Goode v. LexisNexis Risk & Information Analytics Group Inc., accuses the company of making adverse employment decisions without notifying employees when dealing with retail theft reports, as is federally mandated.

The LexisNexis database, used by multiple retailers as a way to report problems and check potential employees, is biased in company’s favor, Moore claims. The program allegedly interprets - in the employer’s favor - any ambiguity in voluntary admissions statements signed by an employee accused of, or admitting to, theft. This could mean innocent employees accused of theft are left with a mark against their name, says Moore.

The two class actions’ similarities arise from central events and share common facts, the judge ruled, saying that the central question in each case was whether the FCRA had been violated by LexisNexis background evaluations. The designation is designed to help efficiency in the courts and to guard against contradictory judgments.