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FCRA Sues LinkedIn

LinkedIn is off the hook. A California district court has dismissed a class action lawsuit filed against the business networking site. The full decision can be found here. The popular social network was sued last year by job seekers who claimed that LinkedIn’s Reference Searches cost them jobs. The theory of the case was that LinkedIn should be treated like other background screening companies–a theory that was successful against another website, Spokeo.

Case Background

Tracee Sweet, the named Plaintiff, had what she thought was a positive interview with a prospective employer. In fact, she later got word that she would be hired. Soon thereafter, the company called her back and said it had changed its mind. As it turns out, the company had checked some references using LinkedIn’s “References Searches” function. Reference Searches is pretty much what it sounds like—it’s a LinkedIn feature that employers use to track down people with whom an applicant may have worked previously.

Sweet and other similarly situated job seekers filed suit, alleging that the reference feature violated their rights under the Fair Credit Reporting Act. At the crux of the complaint was the plaintiffs’ argument that LinkedIn was acting as a consumer reporting agency (CRA) under the Fair Credit Reporting Act (FCRA), and that Reference Searches were consumer reports. Last week a California U.S. District Court dismissed the case, finding that the Plaintiffs had not alleged sufficient facts to support a plausible FCRA claim.

The Decision

In reaching its findings, the court emphasized the following points:

First, the court found that 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 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, the court found that LinkedIn’s publications Reference Searches still would not be consumer reports because Plaintiffs’ allegations do not raise a plausible inference that LinkedIn acts as a consumer reporting agency when it publishes these histories:

The court distinguished the Plaintiffs from the plaintiffs in Robins v. Spokeo, Inc., noting that in Robins, the court held that the plaintiff’s allegations that the defendant “regularly accepts money in exchange for reports that contain data and evaluations regarding consumers’ economic wealth and creditworthiness [were] sufficient to support a plausible inference that [d]efendant’s conduct falls within the scope of the FCRA.”

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.

Third, the court found that the Plaintiffs’ allegations are insufficient to state a claim that the information in the Reference Search bears on the “character, general reputation, mode of living” and other relevant characteristics of the consumers as required by the FCRA.

Fourth, the court found that Plaintiffs do not state a claim that the Reference Search results are used or intended to be used to determine eligibility for employment. “A communication must be “used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for . . . employment purposes . . . .” in order to be a consumer report.” The court did not find that the search results themselves were used in the hiring decision. Rather, the results were used to locate people who may or may not then provide information about the candidate.

Bottom Line

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 web site was in fact a CRA. Likewise, LinkedIn can carry on business as usual. Since it is not a CRA, it has no duty to verify the accuracy of the information reported in the Reference Searches, nor does it have a duty to put consumers on notice about the use of the information in the hiring process. The results of the case have an upside for users and consumers alike who rely on the power and convenience of LinkedIn every day (including me!).  The downside, if there is one, is buyer beware. 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–make sure you do your homework and conduct a real background check before hiring someone you find on social media.

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Background Checks

Paramount Gets FCRA Claim Thrown Out

Finally, a voice of reason. Employers got some good news from a judge in the Northern District of California last week, when the court granted Paramount Picture’s motion to dismiss a class action claim for alleged Fair Credit Reporting Act (FCRA) violations. The case was one of the many class actions that have been flooding the federal courts, disputing the validity of the disclosure form used for running a background check. This wave of litigation has erupted over the past twelve months, putting employers on the defensive against FCRA claims seeking millions in statutory and punitive damages.  The judge’s decision to dismiss the case against Paramount is a welcome development, and may be a turning point for employers facing FCRA class actions of this type.    [...]

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Missing Data

The Government Accountability Office (GAO) has been busy. At the request of Congress, it’s been looking into criminal background checks. Last week the GAO released a report of findings from a two year study titled “CRIMINAL HISTORY RECORDS: Additional Actions Could Enhance the Completeness of Records Used for Employment-Related Background Checks.” The report lives up to that lengthy title–it is the most comprehensive accounting of the current state of FBI background checks, criminal record databases, and practices since 2006. It reveals when and why states conduct FBI record checks, and looks at whether states have improved upon reporting complete records into the FBI database. It also looks at the practices of private companies that conduct criminal record checks. [...]

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Big Data and HR

Big Data and Work-Force Science: A Boon for HR

Big data is transforming the information world at an alarming rate. It’s no surprise that the data being collected, sliced, sorted, and sold is being used to help businesses make better hiring decisions. According to the New York Times, a growing number of entrepreneurs are applying big data to human resources and the search for talent, creating a field called work-force science. To quote technology writer Steve Lohr, “work-force science, in short, is what happens when big data meets HR”  The data part of the equation is collecting all of the digital imprints that a worker or job seeker has left in the course of web browsing, e-mailing, instant messaging, or posting on social media. The “science” part—evaluating and measuring the data—is the tricky part. Silicon Valley start-ups are developing analytics and algorithms to put this data to work for recruiters and employers. [...]

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Ban the box New Jersey

The New Jersey ban the box law, titled The Opportunity to Compete Act, went into effect on March 1, 2015. The law impacts both private and public employers hiring in the Garden State. Like most ban the box laws, the statute does not prohibit employers from asking candidates about their criminal past nor does it prohibit criminal background checks, but it does change the timeframe within which an employer can make an inquiry about criminal history. [...]

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Beef ‘O Brady’s has been served with a class action complaint for alleged violations of the Fair Credit Reporting Act (FCRA). The U.S. sports bar and grill is being targeted for now-familiar claims surrounding the company’s authorization and disclosure for employment background checks. [...]

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gencom-ltl-services

Genwest/Gencom Transportation LLC has been served with a class action complaint for alleged violations of the Fair Credit Reporting Act (FCRA) and the California Investigative Consumer Reporting Agencies Act (ICRAA) as well as a discrimination claim. The US transportation, warehousing, and distribution firm is being targeted for now-familiar claims surrounding the company’s authorization and disclosure for an employment background check. [...]

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Home Depot Background Checks

Litigation Update

Home Depot has been hit with another class action lawsuit[1] alleging violations of federal law based on its employment background screening practices. The mega home improvement store is facing a second Fair Credit Reporting Act (FCRA) lawsuit—this one filed in the Northern District of Georgia on February 11, 2015. The focus of the present case is, like many other cases we have seen in recent weeks, the portion of the FCRA that requires a “clear and conspicuous disclosure” about the background check that is made in writing “in a document that consists solely of the disclosure.” [...]

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Litigation Update

Time Warner Cable has been named in a Fair Credit Reporting Act (FCRA) class action lawsuit filed last week in the Eastern District of Wisconsin. The class action complaint was filed on February 6, 2015, alleging that the company violated portions of the Fair Credit Reporting Act in its employment background screening process. The Plaintiff is a frequent flier—he’s the same guy who was named in one of the FCRA class action cases we reported on last week. Same law firm, same plaintiff, same allegations. Once again, the case focuses on the portion of the FCRA that requires a “clear and conspicuous disclosure” about the background check that is made in writing “in a document that consists solely of the disclosure.” [...]

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Michael's Background Checks

Litigation Update

Michaels Stores was hit with another FCRA class action case last week. You might recall that the arts and crafts retailer was named in a similar suit just a few months ago*. The current complaint is once again about the Fair Credit Reporting Act (FCRA) disclosure requirement under 15 USC 1681b(b)(2)(a). Specifically at issue is the requirement that disclosure is made in a document that consists solely of the disclosure. The complaint alleges that in the company’s employment background screening process, the disclosure is “embedded within one long continuous web page that applicants fill out” that includes application information and a liability release. [...]

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