This a misunderstanding of what I am saying. I don't think the existing system is fine.
Fix the judicial system itself, don't offload that responsibility onto businesses. If arresting a person is so easy as to be able to ruin their life (and I agree that it is), there should be a higher bar to arresting people than < says here his phone was near the scene of the crime >.
If a system is conceived in which a business is able to fire and quickly rehire someone who was wronged by the police, I am supportive of that. But some general idea of, "Well let's just make it illegal for businesses to do that!" is beyond absurd. It's papering over a problem caused by another problem. Businesses are not responsible for fixing a problem caused by the police. This would be as absurd as a business suing the government for failing to prevent a valuable employee from being murdered.