Social Media Background Checks -- LinkedIn May Provide a Sweet Bypass of FCRA Requirements

Social Media Background Checks -- LinkedIn May Provide a Sweet Bypass of FCRA Requirements

08.07.2015

1.         Social Media Background Checks

Just as applicants are no longer limited to scanning the want ads in daily newspapers to find new jobs, employers in checking backgrounds of potential employees are no longer constrained to using a landline telephone to call former employers of applicants.  The internet and especially social media have opened Pandora’s Box when used to access applicants’ backgrounds.  A recent federal court decision, Sweet v. LinkedIn Corp., 2015 WL 1744254 (N.D. Cal. 2015), addressed this concern and determined that use of LinkedIn’s premium service did not implicate Fair Credit Reporting Act (“FCRA”) requirements.

Employers have been using social media sites to conduct background checks on applicants.  The advantage of this methodology is that it is free and gives immediate results.  The dangers involved with in-house background screening include discovering information about protected characteristics of applicants, which could be used in a discriminatory failure to hire lawsuit.  To avoid these types of risks, employers have turned to third party background-check companies.  While scrubbing protected category information from reports might insulate employers from potential discrimination claims, the downside to using third party vendors is that you arguably must comply with the very specific requirements of the FCRA.

2.         Fair Credit Reporting Act Requirements For Background Checks

There are five basic steps an employer must follow in order to comply with the FCRA.  First, the employer must notify the applicant that it might order a consumer report and this notice must be separate from the application and nothing else besides the notice can be contained on the document.  Second, the employer must obtain the applicant’s written consent  authorizing the background check.  Third, the employer must provide a certification to the consumer reporting agency that the employer provided the applicant with necessary notice and disclosures, obtained the applicant’s written consent, intends to use the consumer report for employment purposes, and that it will comply with its obligations under the FCRA.  Fourth, the employer must notify the applicant of possible adverse action prior to taking such action through the Summary of Consumer Rights form and include a copy of the consumer report and a summary of the applicant’s rights under the FCRA.  Fifth, after a reasonable period of time, the adverse action can be taken as long as a post-adverse action notice is sent to the applicant which includes consumer reporting agency contact information, a statement that the consumer reporting agency did not make the adverse action decision and cannot explain the reasons for the adverse action taken, a statement that the applicant may obtain a free copy of his/her consumer report, and a statement that the applicant may dispute the accuracy of the consumer report.

3.         Social Media Checks Can Violate The FCRA

In United States v. Spokeo, Inc., No. CV 12-05001 (C.D. Cal. June 12, 2012), the Federal Trade Commission ultimately entered into a consent decree with Spokeo.  The Commission alleged that Spokeo assembled personal information from hundreds of online and offline data sources, including social networks, and merged the data to create detailed personal profiles.  Spokeo marketed these profiles for use by human resources professionals in hiring decisions.  The Commission alleged as a result of these activities, Spokeo was a consumer reporting agency subject to the FCRA, and its actions violated the FCRA in that Spokeo failed to:  (1) take reasonable steps to ensure the accuracy of information and (2) tell its clients about their obligations under the FCRA like sending adverse action notices to people denied employment on the basis of information supplied from Spokeo.  Spokeo agreed to a 20 year consent decree with strong injunctive language that required it to follow all FCRA requirements and in addition paid a civil penalty of $800,000.

4.         The Sweet Case – Not All Social Media Checks Are Credit Reports

In the Sweet case, one of the named plaintiffs was made a job offer after a telephone interview, and then the offer was rescinded after the employer reviewed references through LinkedIn.  The employer used the References Searches function on LinkedIn, which allows employers to find people’s previous co-workers.  The Reference Searches premium service for paid subscribers generates two types of information:  (1) current and former employers of the applicant; and (2) a list of other LinkedIn members who are in the same professional network of the searching company and who may have worked at the same company during the same time period as the applicant.  The Sweet court held that publishing the plaintiff’s employment histories were not consumer reports because the information that was subsequently shared to a third-party occurred solely as a result of the applicant’s voluntarily providing such information.  LinkedIn, 2015 WL 1744254 at *5.  This exclusion from consumer reports is codified at 15 U.S.C. § 1681a(d)(2)(A)(i).  The Sweet court found it controlling that consumers provide LinkedIn with information about their employment histories so that LinkedIn can publish this information online.  It went on to note that sharing information is precisely why anyone on LinkedIn provides their employment histories to LinkedIn in contrast to a bank loan where there is no expectation that provided employment histories will be shared with others.   Id. at *5.

The court then went on to find that even if the publication of LinkedIn’s employment histories were not within the transaction or experience exception to consumer reports, such publication does not meet the definition of consumer report since it was not a communication made by a consumer reporting agency.  In Robins v. Spokeo, Inc., 2011 WL 1793334 (C.D. Cal. 2011), the court held that accepting money in exchange for reports containing data and evaluations regarding consumers’ economic wealth and credit-worthiness falls within the scope of the FCRA.  The court did not find that that information was voluntarily provided to Spokeo.  Id. at *2.  In contrast, consumers who are the subjects of the Reference Searches voluntarily provide their names and employment histories to LinkedIn for the purposes of publication.  The court concluded that LinkedIn gathers the information about the employment histories to the subjects of the Reference Searches not to make consumer reports but to carry out consumers’ information-sharing objectives.  Sweet, 2015 WL 1744254 at *6.

5.         Ongoing Uncertainty

The plaintiffs in Sweet also contended that the list of names and other information about the references included in the Reference Search bears on the character, general reputation, mode of living of the subject of the searches bringing the information under the consumer report umbrella.  The court found that LinkedIn markets the Reference Search results as a way to locate people who might be able to opine on information rather than the information itself.  In other words, Reference Search is a way for potential employers to locate people who can provide reliable feedback about job candidates rather than a source of reliable feedback about job candidates.  Id. at *8.  This is in contrast to the Spokeo decision where actual information was gathered and sold to human resources professionals.  Thus, while Sweet allows LinkedIn to be used to find potential reference sources, using social media for references opens up a plethora of concerns that should be reviewed with legal counsel to ensure that neither state nor federal law is being violated.

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David Lester is a partner in Musick, Peeler & Garrett’s Orange County, California Office specializing in employment and labor law litigation as well as counseling employers on a variety of topics dealing with employees.  His full bio and contact information can be found at http://musickpeeler.com/professionals/bio.cfm?id=30  

 

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