Erroneous background checking leads to liability

BEFORE EDWARD SOCORRO began working for Hilton Hotels in August 2000, he had truthfully replied no on an employment application when asked whether he had ever been convicted of a felony or misdemeanor. The application also authorized Hilton to investigate his background, and Hilton hired IMI Data Search to investigate whether he had any criminal convictions. IMI mistakenly reported to Hilton that Socorro had been convicted of a misdemeanor and served six months in jail. Hilton, without investigating the veracity of Socorroís denial or asking IMI to verify it report, fired Socorro for falsifying his employment application.

Socorro claimed that after his termination, Hilton told third parties that he was fired because he had lied on his application and was a convict. He also claimed that he was unable to find a job because of these false reports. Socorro sued Hilton and IMI for defamation, false light invasion of privacy and violations of the Fair Credit Reporting Act.

The U.S. District court held that Socorro could sue both Hilton and IMI for defamation and false light invasion of privacy because, under Illinois law, words that impute the commission of a criminal offense are actionable as defamation. The court rejected Hiltonís and IMIís claims that the FCRA preempted the defamation and false light claims. Scorro v. IMI Data Search Inc., N.D. III., No.02-C-8120 (4/28/03).

Impact: Employers are reminded that they are liable for all decisions they make, even when based on data provided by outside sources. In addition, they should always double-check negative findings and refrain from "publishing" the results.