Are Employers Permitted to Search Job Candidates on LinkedIn? [e186]

May 6, 2015

Nasir and Matt talk about a recent decisionthat ruled on whether employers couldrun a reference check on LinkedIn for job candidates.

Full Podcast Transcript

NASIR: All right. Welcome to our podcast where we cover business in the news and add our legal twist. My name is Nasir Pasha.

MATT: And I’m Matt Staub.

NASIR: I’m sorry, who?

MATT: Matt Staub.

NASIR: Oh, Matt! Oh, great.

MATT: Didn’t have your headphones in. Are those the new cordless Beats headphones or whatever the thing they got unveiled at the draft yesterday?

NASIR: I thought those were out for a while, no?

MATT: There’s these new cordless, they might be intended for athletes, but they’re not even cordless because there’s still a cord that goes behind the head connecting the two headphones.

NASIR: Oh, yeah, yeah, yeah. I actually have one of those for running. I didn’t like them. They didn’t stick in my ear because it has Bluetooth in it so it has some weight to it. I’d just rather have something light to plug in and that’s my story on that. Let’s talk about the law and business.

MATT: And LinkedIn which I don’t know if we’ve even talked about LinkedIn ever.
In California, there was a decision – actually, in Federal court – that a reference search on LinkedIn is not a consumer report under the Fair Credit Reporting Act. What people are saying or what people were complaining about was a prospective recruit applies for a job and the employer could do a reference search via LinkedIn and kind of see the backstory, the history of these potential prospects.

NASIR: Well, when we say “people,” keep in mind that it’s not like some LinkedIn user decided to file this lawsuit. I mean, this has definitely been perpetuated from an attorney and they see LinkedIn as a target. I mean, that’s how I see it because I can’t really see any wrong here, what prompted someone to complain that LinkedIn is not presenting information correctly that all the requirements that are required with this Fair Credit Reporting Act, how is this consumer or this LinkedIn user hurt in some way with the information that was provided since especially they are the ones that actually provided the information.

MATT: I didn’t really understand that at all because it’s people complaining about potential employers can see their past work history, references, anything like that. But, if you don’t want that on there – you voluntarily posted that on LinkedIn – if you’re that concerned about that, just don’t post it in the first place would make the most sense, right?

NASIR: Yeah, and that’s pretty much what the court decided as one of the factors. But they actually broke it down in step-by-step, you know, whether LinkedIn’s profiles are considered or it’s information that’s been provided are “consumer reports” or reports that contain information solely as for transactions or experiences between the consumer and the person making the report. And so, not only did it not fit in that definition but also they went on to explain how it’s not a consumer reporting agency, these plaintiffs actually provided this information. You know, when we go on LinkedIn, it’s not like our employers are putting our past history on their work; we’re putting it on there. In fact, we could put whatever we want in there. It could be true or false.

MATT: I still just don’t understand the idea behind bringing this lawsuit in the first place. Like, the employers are discriminating against them before they can even do an interview? Or I guess discriminating against them in the employment search process?

NASIR: I think what it is is that, if they’re able to say that LinkedIn is a consumer reporting agency and that they have to comply with the Fair Credit Reporting Act, then they can say that, in the past X number of years, they haven’t complied with the Fair Credit Reporting Act and they’ve made all these violations and, therefore, this class of LinkedIn users is entitled to all these money damages. That’s why I feel like this is another example of much ado about nothing where an attorney or a group of attorneys sees LinkedIn as a target and, frankly, with some clever argument trying to fit this LinkedIn puzzle piece into this Fair Credit Reporting Act and trying to make a legal damages case out of it.

MATT: The point of the Fair Credit Reporting Act is to protect people from false or inaccurate information being spread about them. I mean, I don’t think LinkedIn auto-populates anything or searches anything so you posted the information. Unless you’re posting false information about yourself, then there’s nothing inaccurate that’s up there.

NASIR: Yeah, which would make it interesting. I wonder if LinkedIn was able to verify some things from employers and have verified reports over its users, then that would be a much different thing and I think that would be a really cool service for employers to look into to be able to have access to that. But, frankly, LinkedIn doesn’t do that. I’m trying to find the complaint itself but I suspect it’s just one of those things where people were trying to stretch the law because, you know, when you look at the actual stats, sometimes, you know, this Fair Credit Reporting Act is quite old so maybe with something new they try to fit, expand its definitions a little bit to see if it fits with LinkedIn.

MATT: Well, I mean, LinkedIn would be the one that has to follow the Fair Credit Reporting Act rules and not the individual employer so are these people disgruntled against, I guess, LinkedIn because they didn’t get jobs? None of it really makes sense to me.

NASIR: No, I agree. But, you know, going back to the Fair Credit Reporting Act, you know, in the employment law context, when you actually pull your employees credit reports which some states allow – many states do not or they have very strict restrictions in all that and we can talk about that in a second – I don’t quite understand the connection because, okay, let’s say you decide to hire an employee who has a lot of debt and doesn’t pay their bills, what does that mean to you as hiring that person whether it makes a big impact or not, I mean, there’s a lot of other things that you can do. It just seems like a weird filter to me, right? You know, what do I care if my employee has bad credit or not?

MATT: Most of the time, yes, I guess. I’m sure there’s certain jobs where you would probably care.

NASIR: Yeah.

MATT: Like, maybe anyone handling money – or not handling money but…

NASIR: Financial advisors?

MATT: Yeah, financial advisors. I didn’t want to come out and say it but…

NASIR: But, for some reason, even then, like, even where it justifies it, having the ability for your employer to pull that seems very invasive.

MATT: Yeah, it’s intrusive, for sure.

NASIR: You know, there are some states like New York City is expected to ban the use of credit checks in employment applications altogether. What do you think about that?

MATT: Going back to what I was saying, I think that’s fine most of the time. I think there are specific jobs where it would make sense to have some sort of credit check, you know. But, at the same time, let’s say you made a decision that was detrimental to your credit that wasn’t your fault and just because you did that doesn’t mean you’re going to do something with a third party that might be a client for the person you work for. So, what you were just talking about in New York City, I mean, the position exemptions, police officers – I don’t really see why that matters at all.

NASIR: I guess this is stretching it a little bit but, if you have a police officer that owns a line of debt, then maybe they’re more susceptible to bribes and things like that. But California has a similar ban statewide for credit checks and they have a list of exemptions that seems like it’s similar. I mean, besides law enforcement, certain management positions, those that have access to personal data, financial responsibility, trade secrets, access to cash. Again, I understand it and it’s good to see that, okay, for certain exceptions, they have it but, obviously, if you have someone working in McDonald’s – not to disparage that position but, you know – going through a credit check seems too intrusive or invasive.

MATT: How far are you going to stretch it to people that are operating a cash register and there’s money in the drawer and they could use that money to pay off their debts? You could keep going all day on that.

NASIR: Yeah, that’s true, that’s a good point. For example, in California, when it says access to cash, and financial responsibility is different, like, I think you actually have to have signatory authority, but access to cash, I’m looking here, it looks like a position that involves regular access to cash totaling $10,000 or more of the employer customer or client during the work day. Even then, it has to be some kind of substantial amount.

MATT: The person that I pay to carry around my wallet, you know, I run a credit check on them because it’s excess of $10,000 cash in the wallet.

NASIR: I actually have the same thing but I make sure I limit it to $9,999.

MATT: What’s the biggest bill they even make nowadays? Do they have $1,000 bills? I don’t think so anymore.

NASIR: They used to. They do not any longer and I think that was because of money laundering and counterfeits and stuff like that.

MATT: Are there still $500 bills out there?

NASIR: Only in Monopoly, I believe, which those are just as good.

MATT: Well, there are still hundreds, we know that.

NASIR: There are no hundreds either.

MATT: Yeah, no hundreds either. Think about the idea of a piece of paper that’s just very, very thin and basically worthless but it’s worth $1,000.

NASIR: Yeah, exactly. And, you know, money, if you just have it sitting around, it’ll deteriorate and actually disintegrate eventually or not be legal tender anymore. That’s why they have those blue wrappers and so forth so, if you’re like me and hides hundreds of thousands of dollars in your couch like I do, you have to actually put it in those blue wrappers and make sure bugs don’t get to it and stuff like that.

MATT: So, the highest current denomination is the $100 bill which makes sense because anything above that would be kind of crazy. But the highest bill ever printed in the US was how much? What do you think?

NASIR: I bet you it’s a million dollars only because they may do it for some kind of novelty specialty purposes.

MATT: No, it was $100,000 but it was in 1934 so that’s probably over a million dollars today in today’s money.

NASIR: That’s what I mean. That was after inflation, of course.

MATT: And there was a $500 bill and that was printed with William McKinley on it so it did exist. Woodrow Wilson was on the $100,000 note.

NASIR: By the way, we did cover LinkedIn back on Episode 80 when LinkedIn was being accused of messing up their overtime rules.

MATT: Okay.

NASIR: Actually, they were made to pay back pay to its employees so it wasn’t, it was more than just an alleged issue.

MATT: I think we can probably just assume any company we talk about has messed up their labor laws at some point.

NASIR: That’s a very true and wise statement and I think everyone should understand that that’s like a very common issue with even big to small employers. It’s just what’s going to happen.
All right. So, let’s see, that is Episode 186 in the books! Thanks for joining us everyone and don’t forget to leave a positive review on iTunes for us.

MATT: Yeah. I mean, if you’ve listened this long into the episode, you obviously like it.

NASIR: Unless you fell asleep which, in that case, time to wake up.

MATT: Yeah.

NASIR: And leave a review!

MATT: All right. Keep it sound and keep it smart.

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Legally Sound Smart Business

A business podcast with a legal twist

Legally Sound Smart Business is a podcast by Pasha Law PC covering different topics in business advice and news with a legal twist with attorneys Nasir Pasha and Matt Staub.
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