This does apply to third party background checks, and backdoor references in particular are just one giant loophole in the Fair Credit Reporting Act.
Eightfold AI is getting sued right now for acting as a credit reporting agency -- not just by scoring people, but by gathering data on them in the first place for the sake of reporting to employers.
If you ask a third party business to do run a background check, there are a bunch of responsibilities that triggers -- a right to view what's in the report, a right to know if it's being used against you, a right to dispute what's in it, and even to consent to it being pulled in the first place.
But if some recruiter or hiring manager goes directly to your former or current boss, behind your back, this is somehow not even taken seriously as a problem.
Companies have been using data brokers to get info on potential employees for ages in violation of the law. The law has almost zero enforcement and when something is done nobody does to prison. It's almost always just the government wanting a cut of the action. For example:
Prison is a limitation of freedom of movement. The equivalent for a company should be the limiting of movement of shares (no shares bought/sold/traded) for the duration of an imposed sentence. Since corporations are people and all, there needs to be an equivalent punishment.
They literally hire someone to be the head of the company, and pay them obscene amounts to set the company culture and policies but somehow they mostly avoid being responsible for bad company behaviour.
Prison for illegal behaviour should be applied to the C suite.
That just leads to the classic scheme of hiring a scrapegoat CEO, while in reality the company is being run by a person who technically holds a lesser title.
Unless that percentage was over 100% of the profit they'd still be making money from doing illegal things and the fines just become a cost of doing business.
Going that route instead of fines it should be a percentage of ownership made public. That:
1. Dilutes that shares, punishing the people who can effect the most change (shareholders)
2. Puts the government on the inside. With ownership, the government can then demand access/knowledge that they can't from a purely private company. And no company is going to want to deal with that headache if they don't have to.
Wait... are you saying that talking about an ex-colleague with anyone (without filing a bunch of paperwork or something) is a "giant loophole in the Fair Credit Reporting Act"?
Yes. But to be clear, since "anyone" is vague: I specifically mean talking to hiring teams, about ex-colleagues who haven't given them permission to ask around in the first place.
Because the Fair Credit Reporting Act governs background checks. It isn't limited to money, or to scoring -- it covers any third party that reports data about you, for the sake of determining if you're eligible for anything from a loan to an apartment to a job. The language of it is broad enough that it doesn't just cover your spending and payment habits, but extends to your general habits, criminal history, personal character, and "mode of living."
I'm saying the behavior normalized by recruiters is a giant loophole in the Fair Credit Reporting Act.
Because when they proactively reach out to random individuals you worked with, to ask you for your views on them as a reference, without your consent, that is an exploit. It is a workaround. It is skirting the actual intentions of the thing, because its scope is limited to "agencies" -- which, no matter how broad that term might be, still ultimately means third party data collectors.
If something your boss said about you came up on a background check, you would have a right to know about it. But if someone on a hiring team goes behind your back to that same boss, for those same comments, that is widely accepted as fine and normal.
Part of the law was broad. Part of the law was narrow. How did you establish the broad part was intended broad and the narrow part was not intended narrow?
I mean, I'm more than willing to take the reductive approach and just say that the purpose of a system is what it does.
But if we assume that it wasn't designed maliciously, we can look at this through another lens: FICO already existed at the time, so banks in particular would simply have no reason to bother calling around to all of your former creditors in the first place.
They would also probably need a third party agency just to find your former creditors.
If you're making hiring decisions based on someone else's statements about the applicant, that someone's statements, if false, are pretty much the definition of defamation in the US.
It's perfectly just that the applicant get to know if the reason they didn't get a job is because their bitter former boss defamed them.
I mean, agreed. I'd go even further and say the whole "Eligible for rehire?" question is an effort to backdoor this into employment verification. Employment verification should be "First date of employment? Last date of employment? Thank you."
"Are they eligible for rehire?" is the nudge nudge wink wink around "well, most of you have policies around providing formal references about performance, so here's one way we can try to gauge".
Eightfold AI is getting sued right now for acting as a credit reporting agency -- not just by scoring people, but by gathering data on them in the first place for the sake of reporting to employers.
If you ask a third party business to do run a background check, there are a bunch of responsibilities that triggers -- a right to view what's in the report, a right to know if it's being used against you, a right to dispute what's in it, and even to consent to it being pulled in the first place.
But if some recruiter or hiring manager goes directly to your former or current boss, behind your back, this is somehow not even taken seriously as a problem.