Motion to Dismiss LinkedIn’s FCRA lawsuit Granted

Do reference searches on LinkedIn violate the Fair Credit Reporting Act? A federal judge in California says no.

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Recently, the U.S. District Court for the Northern District of California dismissed a complaint claiming LinkedIn’s ‘Trusted References’ search function violates the Fair Credit Reporting Act (FCRA). The lawsuit, brought forth by four job applicants, alleges that potential employers found references about them via LinkedIn’s reference search tool and they were subsequently denied employment.

LinkedIn’s ‘Trusted References’ search tool, offered to those who pay for an upgraded premium account, provides the job applicant’s employment history and a list of people who currently or previously worked with the job applicant and may be able to provide feedback about them.

Sweet et al vs. LinkedIn Corporation

The complaint alleges

“any potential employer can anonymously dig into the employment history of any LinkedIn member, and make hiring and firing decisions based upon the information they gather, without the knowledge of the member, and without any safeguards in place as to the accuracy of the information that the potential employer has obtained…LinkedIn sold this functionality to prospective employers, marketing the ability to ‘obtain reports containing “Trusted References” for job applicants who are members of LinkedIn.’“

This is where the plaintiffs say the reference tool violates the FCRA. They claim that background information is compiled for evaluating an applicant. By compiling that information, the plaintiffs claim that LinkedIn was acting as a Consumer Reporting Agency under the FCRA. The FCRA defines Consumer Reporting Agency as

“person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties . . . .”

LinkedIn has maintained that they simply

“gather 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.’”

Motion to Dismiss

Ultimately, the court granted LinkedIn’s motion to dismiss by saying

“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” – not from third parties.

Since the plaintiffs voluntarily provided their names and employment histories to LinkedIn, the court reasoned that

“[a]n entity does not become a [consumer reporting agency] solely because it conveys, with the consumer’s consent, information about the consumer to a third party in order to provide a specific product or service that the consumer has requested.”

The Plaintiffs have until May 19, 2015 to try to restate their claims by an Amended Complaint or attempt to appeal the dismissal.

Fair Credit Reporting Act

The FCRA is a federal law that regulates the collection, dissemination, and use of consumer information, including consumer credit information. It is regulated by the Federal Trade Commission (FTC).

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New Jersey Bans the Box: Criminal Background Checks

The New Jersey legislature passed The Opportunity to Compete Act (S-2500) to prohibit employers from performing criminal background checks and asking applicants about criminal records until after an initial interview.

The Bill now awaits signature by Governor Chris Christie.

What Ban the Box Means for New Jersey Employers

  • Job Advertisements: Employers cannot set requirements for job applicants in job ads that would screen out applicants with criminal records.
  • Job Applications: Employers won’t be able to include questions about applicants’ criminal record on job applications.
  • Initial Interviews: Employers are not allowed to “make any oral or written inquiry regarding an applicant’s criminal record during the initial employment application process,” but if job applicants voluntarily reveal information about criminal records, employers may then ask further questions about the applicants’ criminal records.

New Jersey’s Commissioner of Labor and Workforce Development will enforce the law, fining any employer who violates the Act up to $1,000 for the first violation, $5,000 for the second violation, and $10,000 for each subsequent violation.

The Act does not reference a required posting for New Jersey employers, but the GovDocs Research Department will continue to monitor New Jersey for updates.

Ban the Box Gains Momentum in U.S.

New Jersey joins 12 other states who have passed similar Ban the Box laws. Additionally, nearly 70 cities and counties (such as New Jersey’s own Atlantic City and Newark) have passed ordinances designed to allow job applicants with a criminal record a second chance.