Faulty background check prompts class action lawsuit

When Michele Petry found out that she wouldn't be hired for a nursing job last March, she was shocked to find out why.

The employment background report, conducted by Indianapolis-based IDE Management, revealed that Petry had multiple felonies including a felony conviction for drug paraphernalia and for theft on her record.

The Booneville woman, who boasts a squeaky clean criminal record, insists the report is wrong. And after asking her prospective employer to see her background report, Petry was informed that she would not be hired. 

That led Petry to file a class action lawsuit against IDE Management in U.S. District Court for the Southern District of Indiana, Evansville Division this week.

She says the company, which does business as Cathedral Health Care Centers, denied her a job based on allegedly inaccurate results of a background check without giving her a proper chance to correct those results and thus violated required provisions of the Fair Credit Reporting Act, which governs background checks in the U.S.

The issue of inaccurate employment screenings is wide-ranging when 93 percent of employers conduct criminal background checks on job applicants, according to a survey by the Society for Human Resource Management. 

And research conducted by the National Consumer Law Center states that criminal background screening companies routinely mismatch people, omit crucial information about a case, reveal sealed or expunged information, and/or misclassify offenses.

In this case, Petry submitted to a background check with Indianapolis-based IDE Management, after applying for a position as a nurse with the company in March. 

She was called in for an interview, and was informed by IDE that it would extend an offer of employment if she passed a background screening, according to court documents.

After receiving and reviewing the consumer report, obtained from an unknown consumer reporting agency, IDE decided not to hire Petry based on the report, court documents state. 

After the IDE told Petry they were not going to hire her, Petry asked why.

"Defendant informed Plaintiff that the background report that it had obtained revealed multiple felonies including a felony conviction for drug paraphernalia and for theft." The problem was that Petry has not been convicted of any felonies. 

After requesting a copy of the report, and the company refused, Petry filed a lawsuit. 

As part of her claim, Petry says IDE negligently and willfully violated the Fair Credit Reporting Act when it failed to provide her with a copy of the report and a description in writing of the rights of Petry under the Fair Credit Reporting Act.

The Federal Trade Commission and the Consumer Financial Protection Bureau are required to ensure that reporting companies obey the Fair Credit Reporting Act, which requires them to strive for accuracy.

The law requires that these companies furnish reports drawn from public records for employment purposes to notify the people named in the reports in a timely manner, so any inaccuracies in the data can be challenged and that the public record is complete and up to date.

There are cases in the past where the CFPB have fined consumer reporting agencies for reporting inaccurate information about job applicants. 

In 2015, the CFPB fined General Information Services and its affiliate, e-Background-checks.com Inc. when the the companies included civil suit and civil judgment information from more than seven years ago in reports they provided to prospective employers.

The agency has ordered the companies to correct their practices, pay a $2.5 million civil penalty and $10.5 million in relief to they victims. The CFPB said the reports potentially harmed applicants' employment eligibility and reputations.

And IDE is not the only company facing a class action lawsuit regarding inaccurate employment background reporting results. 

In January, Starbucks Corp. was faced with a class action lawsuit filed by a Colorado man who claims he was denied a job based on an allegedly inaccurate background check and is suing the coffeehouse chain for violations of the federal Fair Credit Reporting Act. 

David M. Marco, a Chicago attorney represents Petry. He told IndyStar that "the company is doing a very poor job of matching people."

States are finding ways to cure the problems of inaccurate background screening results. 

This week, California's Fair Employment and Housing Council finalized new regulations that limit state employers' ability to use criminal history when making employment decisions.

The regulations, borrowing heavily from the EEOC’s 2012 Guidance, will be effective July 1, 2017.

The new regulations prohibit an employer from considering a job applicant’s or employee’s criminal history in making an employment decision if doing so would result in an adverse impact on individuals within a protected class, such as gender, race, and national origin.

In order to succeed on a claim under these regulations, a job applicant must first prove that an employer’s background screening policy actually has an adverse impact on a protected class. 

A representative from IDE declined to comment.

The healthcare management company was founded in 1997 in Indianapolis. 

IMG operates 24 skilled nursing and assisted living facilities in three states, employing 2,200 workers and has grown through consistent acquisitions, according to its website.

Call IndyStar reporter Fatima Hussein at (317) 444-6209. Follow her on Twitter:@fatimathefatima.