Back in August, I posted about large retailers utilizing private databases to track information regarding employees who are suspected of or who may have admitted to internal theft or fraud.  Often the information contained in the databases does not correspond with criminal convictions or even charges.

Now, a man in California, G. Tsang, whose conditional employment was revoked when his employer, a large retail company, discovered an admission statement in a private database has filed a proposed class action in federal court arguing that one of these private databases is violating the Fair Credit Reporting Act (“FCRA”).

When you think of a consumer reporting agency operating under the FCRA, you probably think of Experian, Equifax and Trans Union – and your credit report documenting those dreaded student loans, your mortgage and your credit card history.  But, these private retail databases also qualify as consumer reporting agencies. 15 U.S. Code § 1681a.

In the California action filed by Tsang, his argument is that California employers are prohibited, by California statute,  into inquiring into one’s arrest or detention records that did not result in a conviction.  And, since the FCRA provides that “[a] consumer reporting agency shall not make an inquiry for the purpose of preparing an investigative consumer report on a consumer for employment purposes if the making of the inquiry by an employer or prospective employer of the consumer would violate any applicable Federal or State equal employment opportunity law or regulation” the collection of detention records by these retail databases would be a violation as applied to California employees.  15 U.S.C. § 1681(d)(2).


While Florida does not prevent employers from relying on this admission/statement data, Florida does prohibit “blacklisting” of employees.  As a result, Florida employers who participate in these private employee theft databases need to be careful.  Loss prevention employees should be carefully trained and statement/admission forms presented to employees suspected of internal theft or fraud should include a warning that any statement or admission by the employee will be shared with the retail theft database.

Dori K. Stibolt is a senior associate with the law firm of Fox Rothschild LLP. Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims. You can contact Dori at 561-804-4417 or