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Social Media Reference Searches by Employers Do Not Violate the FCRA, According to California Federal Court

Linkedin_Chocolates.jpgSocial media has become an integral tool for employers during the hiring process, providing opportunities to verify the details of an applicant’s employment and educational history, along with generally learning more about the applicant. Employers must be very careful, however, that they do not inadvertently expose themselves to liability under various employment statutes. A recent decision by a northern California federal court found that a popular social networking site did not violate one federal statute by allowing prospective employers to research an applicant’s background. Sweet, et al. v. LinkedIn Corp., No. 3:14-cv-04531, order (N.D. Cal., Apr. 14, 2015).

The defendant, LinkedIn, operates a business-oriented social-networking service. Users can post their resumes, work experience, educational history, and other details on their profiles. Employers can use the site to conduct background research on job applicants. The “Reference Search” feature allows employers to search for people who might have previously worked with a job applicant. Employers can then contact those people as a way of checking references.

The plaintiff applied for a job through LinkedIn and had an interview. She stated that she received word after the interview that the company planned on hiring her, but a second phone call informed her that the company had changed its mind. The company’s general manager allegedly told her that they had decided to withdraw the offer of employment after contacting some references. Later, the plaintiff claimed, she learned that the company had found these references through LinkedIn’s search feature.

The plaintiff, along with three other individuals with similar experiences, filed suit against LinkedIn, claiming that the Reference Search feature violated the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq. The FCRA “protect[s] consumers from the transmission of inaccurate information about them.” Sweet, order at 2. The law typically applies to information in consumer credit reports. It defines a “consumer report,” in part, as any written or oral communication regarding a consumer’s “character, general reputation, personal characteristics, or mode of living” that could be used in employment decisions. 15 U.S.C. § 1681a(d)(1)(B).

The question for the court was whether the information included in a Reference Search meets the statutory definition of a “consumer report.” The court held that it does not, citing four reasons:
1. Reference Search results only include information about a consumer that LinkedIn obtained from that consumer. A report that only contains information based on communications between the consumer and the reporter is not a “consumer report” under the FCRA. 15 U.S.C. § 1681a(d)(2)(A)(i).
2. The plaintiffs did not establish that LinkedIn is a “consumer reporting agency” within the meaning of the FCRA. 15 U.S.C. § 1681a(f).
3. The plaintiffs did not establish that the Reference Search result information bears on the factors covered by the FCRA, such as “character” or “general reputation.” The searches only allow employers to identify people who might have that sort of information.
4. The plaintiffs did not show that Reference Search results are intended for use in determining eligibility for employment. The court noted that LinkedIn markets Reference Search as a way employers can locate people to serve as references for job applicants, but it “does not market the results themselves as a source of reliable feedback.” Sweet at 18.

If you or your business is involved in a lawsuit or other dispute, an experienced and knowledgeable business litigation attorney can help you protect your interests and fight for your rights. James G. Schwartz has represented businesses in the Bay Area since 1976. Contact us today online or at (925) 463-1073 to schedule a free and confidential consultation.

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Photo credit: By Nan Palmero from San Antonio, TX, USA (Linkedin Chocolates, Uploaded by JohnnyMrNinja) [CC BY 2.0], via Wikimedia Commons.