Legal Proceedings |
3 Months Ended |
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Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | Legal Proceedings The Company is subject to claims, investigations, audits, and enforcement proceedings by private plaintiffs, third parties the Company does business with, and governmental and regulatory authorities charged with overseeing the enforcement of laws and regulations that govern the Company’s business. In the U.S., most of these matters arise under the federal Fair Credit Reporting Act and various state and local laws focused on privacy and the conduct and content of background reports. These claims are typically brought by individuals alleging process errors, inclusion of erroneous or impermissible information, or failure to include appropriate information in background reports prepared about them by the Company. Proceedings related to the Company’s U.S. operations may also be brought under the same laws by the Consumer Financial Protection Bureau or Federal Trade Commission, or by state authorities. Claims or proceedings may also arise under the European Union (“E.U.”) and U.K. General Data Protection Regulations and other laws around the world addressing privacy and the use of background information such as criminal and credit histories and may be brought by individuals about whom the Company has prepared background reports or by the Data Protection Authorities of E.U. member states and other governmental authorities.
In addition, customers of the Company may seek indemnity for negligent hiring claims that result from the Company’s alleged failure to identify or report adverse background information about an individual.
In addition to claims related to privacy and background checks, the Company is also subject to other claims and proceedings arising in the ordinary course of its business, including without limitation claims for indemnity by customers and vendors, employment-related claims, and claims for alleged taxes owed, infringement of intellectual property rights, and breach of contract.
The Company accrues for contingent liabilities if it is probable that a liability has been incurred and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Company does not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote.
Although the Company and its subsidiaries are subject to various claims and proceedings from time to time in the ordinary course of business, the Company and its subsidiaries are not party to any pending legal proceedings that the Company believes to be material. On April 1, 2024, a putative securities class action, Deutsch v. HireRight Holdings et al., No. 3:24-cv-00371 (M.D. Tenn.), was filed against the Company and certain current and former directors and officers of the Company in the United States District Court for the Middle District of Tennessee. The complaint asserts claims under the Securities Act of 1933 on the basis that the Company’s October 2021 IPO offering documents allegedly misrepresented or omitted material information about the Company’s business risks and revenue growth. These claims are asserted on behalf of a putative class of all persons and entities who purchased or otherwise acquired the Company’s securities in its IPO or purchased the Company’s securities thereafter in the stock market pursuant and/or traceable to the Company’s offering documents issued in connection with the IPO. The case is in the preliminary stages and the Company has not yet responded to the complaint. This matter is in a preliminary stage of litigation. The outcome of the case depends upon questions of fact and law that are or may be disputed or not fully known, and cannot be predicted with confidence at this time. Accordingly, the Company cannot estimate a loss or a range of loss, if any, for this matter. The Company intends to vigorously defend this matter.
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