Published on:

Employee Theft Databases Implicate Employment Law Concerns

Retailers across the U.S. have begun using databases listing
workers accused of stealing merchandise in order to prevent those employees
from working again in the industry

Because the databases often do not involve criminal charges and contain
minimal details about suspected thefts, some worry about the use of such
information in eliminating employee’s job chances. 

Many employees who were questioned by store security
officers or submitted written statements in an internal investigation had no
idea the information they submitted would be saved in a database used by
thousands of retailers, including stores like Target, CVS, and Family Dollar.  Merchandise theft accounts for around 44
percent of missing merchandise, with a loss of around 15 billion to the
industry.  Although the databases are
legal, lawyers and federal regulators have become concerned that their use may penalize
innocent employees who are mistakenly caught up in investigations of
theft.  Specifically, the FTC is looking
into whether the databases may violate the Fair Credit Reporting Act.

Some background check companies are wary of the theft information
submitted to the databases, and the FTC has investigated firms that provide
such services, accusing one company of providing inaccurate records and not
allowing consumers to dispute claims. 
Lawyers have attempted to build class action cases against companies
that sell retail theft databases, noting that statements made by an employee
may be extremely difficult to get out of the system even if later proven false.  Especially with an ailing economy, many are
concerned that any blemish on an employee’s background may be enough to deny
him or her the opportunity to interview for an open position.

Admissions statements are often obtained by a retailer’s security
force, and employees are usually not provided the type of formal legal
protections that would attach in a police investigation.  Retailers usually have not warned employees
that admissions of guilt would be forwarded to database companies.  In some instances, even statements that
contain no admission of guilt have been forwarded on and used to prevent future
hiring.  One lawyer termed the databases
a “secret blacklist.”  In general, this
seems like an area of employment law worth monitoring in the future, especially
given the recent legislative activity in many states preventing use of criminal
convictions in the hiring process.