A federal court ruled that employers who use LinkedIn’s reference search function are not required to comply with Fair Credit Reporting Act (FCRA) requirements. The ruling means employers and recruiters can continue to use LinkedIn as they always have.

“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,” said the ruling from the U.S. District Court for the Northern District of California.

Sweet et al v. LinkedIn

The case started when Tracee Sweet said she submitted her resume to a potential employer through LinkedIn, went through the interview process, and was verbally told she would be hired, But she says the company rescinded the offer following a “reference check.”

Sweet reportedly later learned the reference check might have been conducted using LinkedIn’s reference search function, a tool that generates a list of individuals who previously worked with a job applicant.

Other people say they had a similar experience, and believed the LinkedIn reference search tool cost them jobs, so they filed suit against the company.

In Sweet et al v. LinkedIn Corporation, LinkedIn moved to dismiss the case, arguing that the report generated by the reference search function was not a consumer report as defined by the FCRA and that LinkedIn was not a consumer reporting agency under the law.

The court agreed.

The ruling found that LinkedIn “was merely carrying out consumers’ information-sharing objectives” and didn’t have anything to do with the actual assembly of the information.

The court said that LinkedIn’s reference searches are a way for potential employers to locate people who can provide feedback about job candidates. However, LinkedIn does not market the results as a source of reliable feedback about job candidates.

“[T]he fact that a potential employer could use a telephone directory for a job candidate’s current employer to contact people who know the candidate does not make that directory a consumer report.”

The takeaway

Angela Preston, vice president of compliance and general counsel at background screening company EmployeeScreenIQ, told SHRM 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 website was in fact a CRA.

But of course she quickly added that you shouldn’t rely on social media sources for employment-screening purposes.

“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 is to make sure you do your homework and conduct a real background check before hiring someone you find on social media,” she said.