A Federal District Court in Northern California recently looked at the case of Sweet vs. Linked-In, and made an interesting decision that affects the “Reference Search” tool for recruiters on this popular business oriented social-networking site.  Reference Search allows recruiting parties to find their own references in checking out would-be employees, rather than relying only upon the job candidate.  You may be dismayed to learn that employment candidates sometimes choose only the most favorable of references.

In this case, Sweet and other members of her purported class (they were going for class-action status) complained that Linked-In and Reference Search violated their Fair Credit Reporting Act rights, which may have then adversely affected their consideration for certain employment opportunities.  If an activity falls under FCRA, many consumer (which, in this case, are job-seekers) rights are effected.  These are largely similar to the notices, disclosures and protocols involved when employers seek credit and criminal background checks on prospective employees.

The judge determined, however, that:

1 Linked-In does not provide “Consumer Reports” (as concerns FCRA) and so is not regulated in this regard.  Linked-In is therefore relieved from FCRA issues such as “permissible purpose;
2 Linked-In does not sell or provide information to third parties (employers) to the extent that it would be classified as a Consumer Reporting Agency;
3 Linked-In does not attest to the accuracy or reliability of the information;
4 Regarding privacy and similar concerns, the referential information is leveraged on the Linked-In searcher’s network (employer/recruiter here) and not the would-be employment candidate’s network.

Bottom Line: For the moment at least, the Linked-In Reference Search Tool can be used at will since it is not regulated by FCRA (but ceteris paribus don’t take this as hard legal advice because anything can happen).