As our society becomes so much more transparent, it is almost inevitable that privacy policies will arise. We check in places with our phones, post our relationship status on Facebook, Tweet when we are going on vacation and sharing photos from Maui. Some employers are using this shift in social habits as an advantage to utilize free tools to help make determinations about employee and candidate suitability for their organization. Professionally, my own stance is that this whole practice is an invasion of privacy, unreliable, and too much of a risk for discrimination lawsuit. The only times I ever use Facebook for "work" is to post a job and sometimes to send a candidate a message.
There are only a few choices for candidates that are concerned about practices like this. Before you go into the interview, ask the HR/Recruiting representative that you are working with if this is a practice their company employs; this will allow you to make the decision as to whether or not you want to go forward. In the interview, there are a few other options. The first is, of course, refuse to do this during an interview; the choice may be dependent on how badly you need the job. You can say it is a violation of your terms and services; you can say you don't remember your password; you can tell the interviewer/s that you are not comfortable allowing them access to other people's information, and that this practice is a violation of HIPAA (an HR professional should know what this means). You could lie and tell them that you don't have a Facebook account and direct them to your LinkedIn profile (but keep in mind if you do that, and an employer researches and finds an account that is under your name and they can identify you, this is grounds for disqualification for any jobs.)
Other choices involve the content of your account. You could delete your entire account and start over with a new name (maybe a different spelling on the one you use or by a nickname). Delete anything that might be "damning" such as risque photos/status updates, information such as your relationship status/gender interest, religious views, and of course any posts by you or anyone else on your wall that could reflect badly on your general character. Lock down your profile tightly. Be very careful what you "like" in terms of any of the above mentioned subjects.
A longer term view might be to make your state and federal congressional representatives and senators aware of the fact that you find this is intolerable. It is only by voicing your views that the government will consider putting protections in place to guard your privacy. I foresee this practice being banned eventually but until then it is your choice and responsibility to safeguard your online profiles, including those of your circle of contacts.
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