Background-checks settlement would divvy up $20.7 million

A complaint about improper background checks at a Newport News call center has triggered a settlement exceeding $20 million with the company that owns the checking agency.

The lawsuit accused LexisNexis Risk Management Inc. of failing to give employees sufficient notice of problems it had uncovered and, later, of creating too many hurdles when workers requested reviews.

Christopher Colt North, a Newport News attorney who represented the plaintiffs, said he believes it is the largest settlement involving violations of the 37-year-old Fair Credit Reporting Act.

U.S. District Judge Robert Payne in Richmond issued preliminary approval of the settlement earlier this month. A hearing is set for June for final approval.

The suit began with six people who worked in 2005 at the call center, then known as Telespectrum. The class-action settlement is open to 270,000 people across the country who were the subjects of background checks by LexisNexis from mid-2004 to mid-2007, North said.

"I'm getting calls from every state, including Alaska," he said Tuesday.

The dispute started, North said, when Telespectrum took over the call center and required background checks of the employees. About 40, he said, were fired after the checks found they had criminal records.

In at least one case, North said, the reports were wrong. A woman was listed as having been convicted of prostitution and other crimes. In fact, North said, she had no record and was mistaken for another woman in Texas.

The case, though, did not hinge on inaccurate information, but on two other points:

n Lack of notice. The employees, he said, were notified about problems uncovered by the reports sometimes "10 or more" days after their employer received them. The employees did not receive the reports until they were fired, North said.

"When the law says you're supposed to give someone the background check before you fire them, that doesn't mean minutes before or hours before," he said.

The employees, he said, should have received the initial notice no more than one day after the employer did. They should have received the full report at least five business days before they were dismissed, North said.

"For people who were walked out based on a background check, even if they were really a felon, you have to give them a right to explain," North said.

n Appeal hurdles. When employees questioned the reports, North said, LexisNexis asked them to provide two types of identification before it would investigate.

"Not sending the letter on time and then requiring those people to jump through hoops - those people never had a chance," North said. He said he knows of only three employees that were reinstated.

The proposed agreement provides a settlement fund of at least $20.7 million, including attorneys' fees of at least $5.7 million.

North worked with another Newport News attorney, Leonard Bennett, and a Houston law firm.

In the settlement, LexisNexis denied wrongdoing. Jeffrey Cox, a lawyer in Dayton, Ohio, who represented LexisNexis, did not respond to a phone message Tuesday.

Philip Walzer, (757) 222-3864, phil.walzer@pilotonline.com