Databases for Retail Theft in CA Being Challenged for Use In Background Checks

In a recent lawsuit filed in federal Court, the use of a “Retail Theft Contributory Database” in California is being challenged.  The lawsuit alleges that these types of databases violate both federal and state laws because they provide information about persons who were detained, but not convicted, by retail establishments. These databases have come under fire due to their potential negative impact on an individual seeking employment.

A background screening firm is the key focus of the complaint.  This firm allegedly sold memberships to retail merchants, and as part of this membership, required each merchant to contribute suspected shoplifters names, whether employees or customers, to databases shared by all members.  The lawsuit likens these types of databases to employment blacklists.

The key allegation in the lawsuit is that these databases contain information that did not result in a conviction.  The background check firm did not work to confirm whether or not the admission statement made by the employee at the time of the detention was true or not, simply just verifying that they are in possession of the admission statement.  One of the largest selling points for these databases were that they held information that otherwise would not be obtainable by another retailer unless provided by the applicant.

Under California law, employers are prohibited from seeking or inquiring into arrests or detention records that did not result in a conviction.  Under the federal guidelines, the FCRA specifically prohibits a background screening firm from making in inquiry for employment purposes if it would violate Federal or State equal opportunity law. Furthermore, the use of databases for decision making, without backing up the information found with a county criminal search is illegal.

As can be seen in the above description, these types of databases are riddled with legal issues, and any retailer or company should consider the legal ramifications that might come along with obtaining this type of information via databases and using it against a potential employee.  It also brings to the forefront the point that a company needs to know and understand all applicable laws regarding fair hiring practices before allowing the use of this type of information found in databases.