Court: LinkedIn Isn’t an Agency When It Comes to Background Screening

LinkedIn is off the hook.

A California district court has dismissed a class action lawsuit filed against the business networking site (the full decision in Sweet v. LinkedIn Corporation 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 credit worthiness [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.

The 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.

This was originally published on the EmployeeScreen IQ blog. EmployeeScreen IQ is not a law firm, and the contents of this article are not intended to be a substitute for legal advice.