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> HR background check companies don't always filter out names in criminal reports who aren't charged with anything

This is its own problem that requires strong privacy laws. If innocent suspects aren't used as a plausibly-indicative red herring, something else will be.

>because of public records laws, means the data becomes public

This is absolutely not how public records laws work. Look up the Privacy Act.

I don't think those generally show up in reports, and this would be virtually impossible if you use a reputable background checking company.

Every "hit" shows on your copy of the record, and you should be able to challenge it.