A Shaky Relationship: FCRA & Data Analytics

This past weekend, the New York State Bar Association has asked me to speak about data analytics in human resources at their fall conference.  This is one of my favorite topics, particular since data analytics have a huge impact on HR now and will to continue to in the future. This post and many others in the future will cover data analytics, its impact on HR, and how compliance can get tricky with the technology.

Big data, data analytics, HR analytics, people analytics, talent analytics – no matter what you call it – is changing how HR operates.  Vendors, like Gild, Pocket Recruiter, HireVue, and many, many others, offer algorithm-based technology to make traditional HR pain points as simple as a few clicks.  In the few clicks and the algorithm itself lies the potential for violations of various employment and labor laws.

Let’s start with the Fair Credit Reporting Act.  FCRA governs consumer reporting agencies in how they gather and report on particular individuals, including job applicants, even when these consumer reporting agencies are collecting public information.  In the employment context, these reports include criminal background checks, credit checks, and even social media searches when the reports are compiled by third parties and provided to employers.

In order to gather the information and get authorization from a job candidate, employers must follow strict disclosure requirements, give candidates notice that a report will be generated, and provide avenues for candidates to dispute information they believe is inaccurate.  Simply put, it can be incredibly easy to run afoul of FCRA.

One data analytics vendor, Joberate, has created an algorithm that takes publicly available data, like social media usage, and allows recruiters to determine whether a particular candidate could be interested in a new job.  Joberate generates a J-Score that can tell a recruiter whether an individual is in engaged in job-seeking behavior – the more job-seeking behavior, the more likely the individual would be interested in speaking with the recruiter.  By knowing individual J-Scores, recruiters aren’t wasting their time contacting passive candidates who aren’t really candidates at all.  They can be focused only on individuals who are ready to make a career change.

So what does FCRA have to do with this?  Potentially, a lot.  When a third party does any kind of search that includes information that may “serve as a factor in determining a person’s eligibility for employment” and gives that information to an employer, the Federal Trade Commission takes note.  Whether an individual is truly engaging in job seeking behavior may be considered a factor on whether a recruiter reaches out to that particular candidate and whether the individual is considered a candidate for employment.  So does an employer violate FCRA by using Joberate?

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