California court held that employers can look for candidates’ trusted references on LinkedIn (but the service has been discontinued)

On April 14, 2015, in Sweet v. LinkedIn Corporation, a California District Court held that reference searches conducted through LinkedIn do not amount to background checks.

LinkedIn Reference Searches are not protected under the Fair Credit Reporting Act (“FCRA”), and therefore employers are not subject to its requirements, (e.g. obtaining candidate’s written permission, disclosures obligations).

In this case, Tracee Sweet submitted her resume to a potential employer through LinkedIn and was invited to an interview. Sweet thought things went well, especially when she received notice that she would be hired. But soon thereafter, the company called her back and said it had changed its mind.

Ms. Sweet and three others brought a class action against Defendant LinkedIn Corporation, and claimed that the “Reference  Searches” function violated their rights under the FCRA. According to Plaintiffs, employers used LinkedIn’s “Reference Searches” function to verify their background and decided not to hire them. Read the complaint.

LinkedIn’s Reference Search feature allows (or better “allowed” because the service had been discontinued, starting June 10, 2015) to search for “references” for any LinkedIn member upon payment of a subscription fee. According to Plaintiffs, LinkedIn violated their rights under the FCRA by furnishing Reference Search results for employment purposes, and sought statutory damages, actual damages, punitive damages, attorney’s fees and costs.

LinkedIn moved to dismiss Plaintiffs’ complaint for failure to state a claim. The court granted the dismissal: Plaintiffs did not alleged sufficient facts to support a plausible inference that the Reference Searches are within the FRCA’s definition of a consumer report.

The Court based its decision on the following main reasons:

First, the specific purpose of LinkedIn is for members to “share their professional identities online.“ LinkedIn’s publications of employment histories of the users “consumer reports” because the information contained in these histories came solely from LinkedIn’s transactions or experiences with these same consumers. The FCPA 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.”

Second, LinkedIn “gathers the information about the employment histories of the subjects of the Reference Searches not to make consumer reports but to “carry out consumers’ information-sharing objectives”. On the contrary, a consumer reporting agency’s purpose is to gather information to furnish to third parties.

Third, the information collected via Reference Search comes from the searcher’s networks, not the employment candidate’s networks.

Fourth, the purpose of the Reference Searches does not fall within the purpose element of the consumer report definition.

“Plaintiffs do not state a claim that the Reference Search results are used or intended to be used as a factor in determining whether the subjects of the searches are eligible for employment.” “Plaintiffs need not establish that the “information communicated by the [Reference Search results], standing alone, could be used” to make an employment-related decision in order to establish that the Reference Search results are consumer reports”. And according to the court, Plaintiff did not.

Read order of the court here.

More information on Sweet v. LinkedIn Corporation, NDCA, No. 5:14-cv-04531, April 14, 2015 is available at… Open Pdf

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