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Employers who use LinkedIn’s reference search function are not required to comply with Fair Credit Reporting Act (FCRA) requirements, a federal court ruled April 14, 2015.
The U.S. District Court for the Northern District of California dismissed a complaint alleging FCRA violations based on LinkedIn’s reference search function. The tool generates a list of individuals who previously worked with a job applicant.
In Sweet et al. v. LinkedIn Corporation, a group of rejected job applicants sued LinkedIn and argued that the function did not comply with FCRA requirements.
Tracee Sweet submitted her resume to a potential employer through LinkedIn, went through an interview and was told that she would be hired, but was then told the company had changed its mind because of a reference check. Sweet later learned that the check may have been conducted using LinkedIn’s reference search function. Each plaintiff had a similar experience and, believing that the LinkedIn tool cost them jobs, they filed suit against the company.
“At the crux of the complaint was the plaintiffs’ argument that LinkedIn was acting as a consumer reporting agency (CRA) under the FCRA, and that reference searches were consumer reports,” said Angela Preston, vice president of compliance and general counsel at background screening company EmployeeScreenIQ.
LinkedIn moved to dismiss, arguing that the report generated by the function was not a consumer report as defined by the FCRA and that LinkedIn was not a consumer reporting agency under the law. The court agreed. “LinkedIn’s publications of employment histories of the consumers who are the subjects of the Reference Searches are not consumer reports because the information contained in these histories came solely from LinkedIn’s transactions or experiences with these same consumers,” the court said. The FCRA excludes from the definition of consumer report any report “containing information solely as to transactions or experiences between the consumer and the person making the report.”
The court also held that LinkedIn was a not a consumer reporting agency under the FCRA. The FCRA defines a consumer reporting agency as “any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties. ...” In this case, “the court found that LinkedIn was merely carrying out consumers’ information-sharing objectives and not acting as a consumer reporting agency with regard to its assembly of this information,” Preston said.
The court said that LinkedIn’s reference searches are a way for potential employers to locate people who can provide feedback about job candidates, but LinkedIn does not market the results as a source of reliable feedback about job candidates. “[T]he fact that a potential employer could use a telephone directory for a job candidate’s current employer to contact people who know the candidate does not make that directory a consumer report.”
“The good news is that employers and recruiters can continue to use LinkedIn as they always have, without fear of additional compliance requirements that would have attached if the court had found that the website was in fact a CRA,” Preston said.
However, she cautioned against relying on social media sources for employment-screening purposes. “Like any other social media source, much of what you find on LinkedIn is user-generated content. There’s no good way to know if it’s accurate. My advice is to make sure you do your homework and conduct a real background check before hiring someone you find on social media,” she said.
Roy Maurer is an online editor/manager for SHRM.
Follow him @SHRMRoy
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