A federal judge in San Jose ruled out that LinkedIn's "Reference Search," a tool for premium members to find job candidates' past colleagues, does not run into conflict with the 1970 federal law Fair Credit Reporting Act (FCRA).
Four named plaintiffs who filed the proposed class action, claimed in their complaint that they received interest from businesses and recruiters, but were ultimately not considered for the positions they sought after their would-be employers connected with them on LinkedIn.
One of the plaintiff alleged that she'd actually been offered a job in the hospitality industry only to have that offer rescinded after an employer reviewed her references.
They urged the court to interpret the FCRA liberally, and said LinkedIn should be considered a credit reporting agency because it collects and distributes consumer information to third-parties.
They also argued that LinkedIns reports cause prospective employers to pass judgment on applicants' character, reputation and other personal characteristics' as outlined in the FCRA and could hurt their reputation by potentially linking them with schemers.
LinkedIn said that it didn't violate the FCRA with its feature that allows businesses to check prospective employees' references without the applicants' knowledge, according to a California federal judge who granted the company's motion to dismiss a proposed class action on April 14th, 2015.
Judge Paul S. Grewal said the reference searches can't be considered "consumer reports" under the law. He also said that it couldn't be considered a "consumer reporting agency" because what the plaintiffs did was voluntarily providing their information for the purpose of being published online.
"As LinkedIn notes, the facts alleged in plaintiffs' complaint therefore support the inference that LinkedIn gathers 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,'" said Grewal.
The judge also said that the plaintiffs undercut their argument to provide "the real story" about job candidates by also alleging that LinkedIn markets its reports as a means of locating people who can provide additional information about an applicant, rather than as sources of that information.
LinkedIn had argued that under the standard proposed by the plaintiffs, a phone directory for an applicant's current employer could be considered a consumer report because it allows prospective employers to directly contact people who know the applicant.
Judge Grewal concluded that the plaintiffs' interpretation was too broad, but found that the defects in their arguments aren't incurable. Grewal was also unconvinced and said that LinkedIn's service only displays people who were already in the employer's network. This means that the search results say more about the searcher than the subject of the search.
“We are pleased that the court dismissed the plaintiffs’ legal claims and recognized that our members understand that when they share their employment history on LinkedIn they make it easier to be found and contacted regarding relevant job opportunities,” said a LinkedIn spokesman.
The plaintiffs are represented by James L. Davidson and Michael L. Greenwald of Greenwald Davidson PLLC and Todd Michael Friedman of Law Offices of Todd M. Friedman PC.
LinkedIn is represented by Tiffany Cheung, Angela Elaine Kleine and James Francis McCabe of Morrison & Foerster LLP.