Is Sourcing Technology Against The Law? by @smheadhunter

We recently saw LinkedIn settle a lawsuit for $13 million on the validity of sending multiple email invitations to your contacts. That’s a tiny award for a company, so we can’t read much into it, but LinkedIn has been the constant target of class action lawsuit news.

The big win, though less trumpeted in the news, was an April decision from a California federal judge that LinkedIn was not a consumer reporting agency for the purposes of a lawsuit. Many of you are scratching your heads, but the April lawsuit is bigger news for the sourcing world.

The crux of the consumer reporting lawsuit was that LinkedIn’s reference search should be regulated under the Fair Credit Reporting Act. This was indeed a big problem, because if LinkedIn was a consumer reporting agency, it had to provide a way for people who were rejected from jobs on the basis of information provided from LinkedIn a method of viewing and correcting their data.

Anyone getting a nervous twitch?

TalentBin, now owned by Monster, just got hit with a state based class action suit alleging that TalentBin is a consumer reporting agency. LinkedIn won their case because information from reference contacts isn’t the same as information that reference contacts exist. TalentBin will probably put forth similar arguments, but it’s not inconceivable a judge will rule that social, resume, and profile information that is scraped by a service is for the purposes of the court, consumer information used in the decision on hiring and thus subject to the FCRA.

Taking a step back, it’s also likely that TalentBin can point to the difference between a prospect and a candidate, creating a barrier that no lawyer can surmount. The class action suit would have to prove that a company used TalentBin data to deny someone employment, which just isn’t how the process works. I’m no lawyer, but I wouldn’t be sweating bullets.

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There is a trend here, and one that the big companies are going to start thinking about. The latest and greatest sourcing companies (I won’t name them but assume all of you know who I’m talking about) are on a dangerous track. They’re promising through the use of the algorithms to not only source, but filter and rank candidates from information scraped from their online profiles. The cutting edge companies are even marketing the idea that they can do behavioral analysis based on information publicly available.

When you apply to a position, you’re asked to sign forms that indemnify the company and authorize them to check your background, credit, references, and often to take behavioral surveys as a condition of employment. Companies that source this information do so without permission, while those that rank candidates are making decisions that actually are used to determine if someone is going to get a job.

Recruiters admit privately to looking at social media profiles of candidates before making an offer and while they’re in process. When that data is found in an ATS, or through a sourcing software, it’s coming very close to a definition that a judge might consider protected consumer information. Remember, it’s not whether it is – it’s what an old judge without technical expertise thinks it is.

As we move into the amazing world of big data and the sourcers that love it, it’s going to be increasingly important to pay attention to how these lawsuits turn out. A sourcing software company can go out of business. A company that uses that software, in the parlance of class action lawyers, is the kind of juicy target that has “deep pockets.”

Jim Durbin is the owner of
Durbin Media Group and a headhunter specializing in social media . As a blogger and a business owner, he is a valued speaker on the topics of online employment, recruiting blogs, and using social networks in the hiring process. Prior to starting the Durbin Media Group, he was a top performer as an account executive for national staffing firms. He entered the employment world in Los Angeles in 1999, at the peak of the dot-com boom. He is a 1995 graduate of Washington and Lee University in Virginia, and currently lives in St Louis. For information on his latest training products, check out the Social Media Headhunter Café.

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