Legal Clinic

Searching for Candidate Information

There seems to be a wave of optimism for 2010 -- a hope that we will see an upsurge in the economy and employment. Because of this, many companies are preparing to hire again and will need to brush up on their screening practices to ensure that, when the time comes, they remain compliant with the laws related to the process.

Monday, January 25, 2010
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Question:  Can you provide the parameters for HR in the use of information discovered on the Web, such as Facebook, as it applies to job applicants? 

Answer:  Social networks and blogging sites can provide an inexpensive and easy way for employers to gather a plethora of information about potential job applicants. However, employers should think twice about using information found on social-networking sites to make employment decisions because the use of such information could lead to the potential risk of employer liability. 

This is because these sites contain information about job applicants that employers would not be permitted to ask about during any job interview. Therefore, using, and in some cases, simply accessing these pages for employment purposes can result in violations of various anti-discrimination statutes, privacy laws, state "off-duty" conduct statutes, and federal and state Fair Credit Reporting Acts. 

Discrimination:  Federal statutes -- such as Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act and the Americans with Disabilities Act -- as well as several state statutes prohibit employers from inquiring or basing employment decisions, including hiring, on factors such as race, sex, age and disability respectively. See, e.g., 42 U.S.C. §§ 2000e et seq, 29 U.S.C. §§ 621-34; 42 U.S.C. §§ 12101 et seq

Therefore, searching an applicant's Facebook page may disclose that an applicant is gay or a lesbian (protected under Title VII -- see note here), that he or she suffers from a mental disability (protected under the ADA) or reveal an applicant's marital status (protected under various state regulations including California) -- all of which are unlawful characteristics for an employer to base employment decisions on. See id. 

Even if an employer refrains from using this type of information when considering applicants, employers who screen these sites may be providing rejected applicants with a basis for alleging that an employer's decision not to offer them a job was due to a protected characteristic that was clearly visible through the site. 

While proving such a claim may be difficult, an employer's admission that it examined an applicant's blog or profile prior to making an adverse employment decision makes it more difficult for an employer to defend against discrimination claims, while making it easier for applicants to entangle employers in timely and costly litigation.


Fair Credit Reporting Acts: Employers who use third parties to conduct background investigations on potential applicants via social Web sites or otherwise, must ensure that they comply with the federal Fair Credit Reporting Act as well as its state law counterparts, if applicable. 

The FCRA governs how employers may use consumer reports procured by consumer-reporting agencies for employment purposes (hiring, promotion, reassignment decisions). 15 U.S.C. § 1681a et seq. If employers use consumer-reporting agencies that research social-media Web sites such as Facebook to conduct investigations of applicants, employers could be subjected to liability if the applicant was not informed of the search and failed to give written consent. Id. § 1681b(b)(2). 

Accordingly, employers should ensure they explicitly state in background-screening consent agreements that social networking and/or blogging sites will be accessed. It should be noted that the FCRA does not prohibit employers from obtaining consumer reports that contain information derived from Internet postings or blogs. However, employers are required to disclose to applicants or employees that such information was the basis of an adverse employment decision (such as a decision not hire the applicant). Id. § 1681b(b)(3)(B)(i)(I).

"Off-duty" Conduct Statutes: In addition to discrimination statutes and the FCRA, employers must also be mindful of various state laws that protect an applicant's "off-duty" conduct. Certain states permit employers to penalize applicants or employees for off-duty conduct that reflects adversely on the employer or creates friction within the workplace. 

However, there are several states that have enacted statutes that prohibit employers from considering lawful off-duty conduct when making adverse employment decisions. 

Some states, including New Jersey and Missouri, protect only certain types of off-duty conduct such as smoking and drinking. See N.J. Stat. Ann. § 34:6B-1 (prohibits refusing to employ a person because an individual "does or does not smoke or use tobacco products"); Mo. Rev. Stat. § 290.145 (prohibits refusing to hire any individual because of his or her use of lawful alcohol or tobacco products). 

Other states, however, provide broader protection prohibiting adverse employment actions based on an individual's participation in lawful activities. See N.Y. Lab. Law § 201-d (refusing to hire an individual who engages in legal off-duty political or recreational activity is unlawful.)

Dating, however, is not protected as a recreational activity. See McCavitt v. Swiss Reinsurance Am. Corp., 237 F.3d 166 (2d Cir. 2001)); Cal. Lab. Code §§ 96(k); 98.6 (broadly prohibits adverse employment action based on "lawful conduct occurring during non-working hours away from the employer's premises"). 

Employers in these states may therefore be precluded from using lawful activity -- such as pictures of an individual drinking heavily -- found on an applicant's off-duty social-networking site or blog as a basis for making a hiring decision.

Privacy Laws: Exploring an applicant's blog or social-network profile may also initiate common-law privacy claims from applicants who feel their sites should not have been viewed by an employer without their permission. Establishing these claims in the Internet context may be difficult because applicants must prove a reasonable expectation of privacy, which can be problematic when thousands of people can access an applicant's Facebook or Myspace page. 

However, employers are more susceptible to liability when an applicant has instituted privacy controls such as a password or preference settings. See Konop v. Hawaiian Airlines, Inc., 302 F.3d 868 (9th Cir. 2002), cert. denied, 537 U.S. 1193 (2003). 

Employers who manipulate social-networking sites by circumventing privacy settings may violate the terms of use conditions established by social-networking sites, and may be exposed to liability under federal laws, such as the Stored Communications Act, which protects the privacy of stored Internet communications. 18 U.S.C. §§ 2701 et seq.

In sum, while the abundance of information available online may be very appealing to employers, in light of the potential risks associated with using social-networking sites to screen applicants -- including the fact that the information might not even be accurate -- employers should carefully weigh the benefits of obtaining information from these sources against the harm of potential employer liability. 

Question: Can we deny employment to an applicant if we find out she plans to move out of state in the near future? What about if we discover the information after extending a job offer? Can we still reject the candidate?

While many states adhere to the doctrine of employment at-will, which allows employers to terminate employment for any non-discriminatory reason absent an employment contract, an employer could subject itself to potential liability for rescinding a job offer if the applicant can prove he or she relied on the job offer to his or her detriment.

The Employment At-Will Doctrine

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Generally, employers have free rein to hire applicants of their choosing based on their own selection criteria, including whether or not an applicant plans to move out of state. However, employers must be careful not to base hiring decisions on unlawful characteristics such as an applicant's age, race, sex, religion or disability. See, e.g., 42 U.S.C. §§ 2000e et seq, 29 U.S.C. §§ 621-34; 42 U.S.C. §§ 12101 et seq.

Similarly, in terms of terminating an employee, unless there is a contract, employment in the United States is at-will, which means an employer can fire an employee for any reason, no reason, or even an unfair reason as long as the employment decision does not implicate statutory exceptions to the at-will doctrine or violate public policy. See, e.g., id.; Russek v. Dag Media, Inc., 47 A.D.3d 457, 851 N.Y.S.2d 399 (1st Dep't 2008) (holding an employee who alleged she was terminated for failing to perform illegal acts stated a claim under New York's Labor Law). 

Usually, the at-will doctrine will prevent an employee from recovering damages from an employer that arise from an employee's termination. However, when a job offer is made and accepted, and then rescinded by an employer before the prospective applicant begins work, application of the at-will doctrine becomes more complex.

In some states, including Pennsylvania, Virginia and New York, the at-will doctrine will bar an individual from recovering damages. See Stumpp v. Stroudsburg Mun. Auth., 540 Pa. 391, 658 A.2d 333, 335-36 (1995); Nguyen v. CNA Corp., 44 F.3d 234, 241 (4th Cir. 1995). See also Shapira v. Charles Schwab & Co., 225 F. Supp. 2d 414, 419 (S.D.N.Y. 2002) (noting that New York does not apply the doctrine of promissory estoppel in the employment context. In other words, in New York, if an applicant cannot show that the employer had in effect a written policy that expressly limits the right of discharge, the applicant can sue an employer who reneges on a job offer or other employment promise on the promissory estoppel theory.). 

However, in states such as New Jersey, prospective employees may be able to recover damages under the theory of promissory estoppel or detrimental reliance when an employer reneges on a job offer where the circumstances indicate a lack of "good faith and fair dealing" on the part of the employer. See Peck v. Imedia, 293 N.J. Super. 151, 679 A.2d 745 (App. Div. 1996).

To recover under promissory estoppel in this context, an employee/applicant must prove that: (1) the employer made a clear and definite promise to the employee; (2) the employer intended to induce the employee to rely on the promise; (3) the employee relied on the promise; and (4) the employee suffered a detriment or injury as a result of that reliance. See Toscano v. Greene Music, 124 Cal. App. 4th 685, 690-91, 21 Cal. Rptr. 3d 732, 736-37 (2004); Fox v. T-H Cont'l Ltd. P'ship, 78 F.3d 409, 413 (8th Cir. 1996).

The key to a successful claim is proving detrimental reliance. This requirement has been met by factors such as quitting current employment, rejecting another job offer or moving to a new state or city to work for the new employer.  See, e.g., Sheppard v. Morgan Keegan & Co., 218 Cal. App. 3d 61, 67, 266 Cal. Rptr. 784, 787 (Cal. Ct. App. 1990); Peck, 293 N.J. Super. 151, 679 A.2d 745.

An employee's damages are usually determined by the extent of the detrimental reliance. For the most part, an employee may be able to recover various expenses related to the job offer including moving expenses and lost wages from the job given up for the new one. See id. 

Loss of future income or salary a prospective employee would have made had the job offer not been rescinded, is generally not recoverable. However, at least one court in California has held that a prospective employee can recover for loss of future earnings provided that damages are proven with "reasonable certainty." See Toscano, 124 Cal. App. 4th at 695, 124 Cal. Rptr. 3d at 738.

All in all, before deciding to renege on any job offer, employers must familiarize themselves with their particular state's laws regarding at-will employment and the applicability of the doctrine of promissory estoppel.

Keisha-Ann G. Gray is senior counsel in the Labor & Employment Law Department of Proskauer Rose in New York and co-chair of the Department's Employment Litigation and Arbitration Practice Group.

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