No – the U.S. District Court for the Northern District of California recently dismissed a complaint alleging Fair Credit Reporting Act (FCRA) violations based on LinkedIn’s Reference Search function. LinkedIn’s “Reference Search” function is available to premium account holders. It is designed to generate a list of individuals who previously worked with a job applicant and who may be able to provide feedback about the applicant’s previous job performance.
In Sweet et al. v. LinkedIn Corporation, a group of rejected job applicants sued LinkedIn and argued that the Reference Search function did not comply with the requirements of the FCRA. No. 5:14-cv-04531-PSG (N.D. Cal., Apr. 14, 2015). The FCRA is a federal statute that regulates “consumer reporting agencies,” which provide “consumer reports,” such as background checks, for employment purposes. See 15 U.S.C. § 1681 et seq. Among other things, the FCRA requires consumer reporting agencies to “adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy and proper utilization of such information.” 15 U.S.C. § 1681(b). The FCRA also imposes requirements for employers who utilize consumer reports provided by consumer reporting agencies to assess job applicants, including obtaining written authorization from the applicant and notifying the applicant if an adverse decision is based in part on information contained in the consumer report.
In Sweet, the court granted LinkedIn’s motion to dismiss based on its conclusion that the Reference Search function on LinkedIn was not a “consumer report” for purposes of the FCRA. The court explained that “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 FCRA defines “consumer report” to exclude a “report containing information solely as to transactions or experiences between the consumer and the person making the report.” 15 U.S.C. § 1681a(d)(2)(A)(i).
The court also held that LinkedIn was a not a “consumer reporting agency” under the FCRA. The FCRA defines “consumer reporting agency” as “any 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 . . . .” 15 U.S.C. § 1681a(f). The court reasoned that because the complaint alleged that the plaintiffs voluntarily provided their names and employment histories to LinkedIn, the complaint supports the conclusion that LinkedIn gathered the information for the purpose of carrying out the plaintiff’s information-sharing objectives – not for the purpose of creating consumer reports.
Takeaway: Because the Reference Search function is not a consumer report subject to the FCRA, employers who utilize the function are not required to comply with the FCRA requirements unless they conduct a separate background check that qualifies as a “consumer report.”