Here’s another warning about conducting thorough investigations when a staffer is accused of wrongdoing:

A former Rite Aid employee sued the company and ChoicePoint, an online employee screening service, after he was fired for allegedly stealing more than $7,000 worth of cash and merchandise.

After discovering the loss, the company suspected the employee was to blame. He was fired, and information about the theft was sent to ChoicePoint.

But the employee claimed he was innocent, and the company failed to properly investigate. He said he was “aggressively questioned” by a Rite Aid official and coerced into signing a statement admitting he stole the money.

He was later awarded unemployment compensation because the company didn’t prove he was guilty. After failing to get other retail jobs because of his now-spotty background check, he sued for defamation.

The company tried to have the case thrown out, claiming it couldn’t be liable because it believed the report it sent ChoicePoint was true. But the judge didn’t buy it, because the company failed to show its investigation reached any legitimate conclusions.

The court let the case move forward, ruling the store knowingly submitted an unfounded accusation to the database. Now the company will have to settle or face a costly jury trial.

Cite: Prendergrass v. ChoicePoint

Tags: defamation, employee theft