Employers Report to Employment Screening Services Leads to Libel Suit

December 18, 2008 (PLANSPONSOR.com) - A libel suit that recently received approval from a federal district court judge suggests that employers must proceed with caution when reporting workplace behaviors to employment screening services.

Attorneys for Rite Aid moved for dismissal of the libel claim, arguing that the one-year statute of limitations had run before the former employee filed suit, according to the Legal Intelligencer. However, U.S. District Judge Bruce W. Kauffman disagreed, finding that libel law differs for reports to a confidential database that is accessible only to subscribers.

Kauffman said courts have adopted the “single publication rule” in order to avoid the risk of an infinite limitations period that would result if a claim accrued each time a reader views a defamatory publication such as a magazine or newspaper, but he found that Rite Aid’s report to ChoicePoint differed because it was an electronic report that was “not made available to the public but only to subscribing members of a database,” the news report said.

Theodore Pendergrass claims he was falsely accused of theft in a report sent by Rite Aid to ChoicePoint Inc. He said the report made it impossible for him to get a new job as he was turned away by CVS, Walgreens, and Target.

According to Pendergrass’ claim, he was coerced into signing a statement at the time he was fired by Rite Aid but he never admitted to theft and Rite Aid’s accusations were later rejected when Pendergrass was awarded unemployment. Despite winning at the unemployment hearing, Pendergrass says the false accusations were filed by Rite Aid to ChoicePoint.