I am frequently queried by clients about the use of social media as a tool for hiring. Surfing Facebook, Linked In, or even Twitter, can frequently give a company insights into an applicant's personality, work ethic, and propensity for teamwork that will not come through in a relatively brief interview or a resume. However, companies must be aware of the pitfalls that exist when using social media information to make significant employment decisions such as hiring.
For example, it's possible that a social media site can provide too much information, in the form of an applicant's race, age, religious affiliation, or other protected category. This type of information is typically not included on an employment application for good reason--it provides a basis for a discrimination claim in the event the applicant isn't hired. In the employment discrimination world, there's no legal difference between learning that someone is a practicing Druid from reviewing an application and learning it from a Facebook site.
In addition,, social media data are often subject to reliability issues. If you have not figured out by now that everything you read on the World Wide Web isn't true, then you should not be in a position of responsibility not only at your company, but within your family. The operative phrase for Internet information: Don't Trust, and Always Verify.
Privacy is another issue, although frankly, if your hiring managers are hacking into people's private Internet sites as part of their routine practices, your general counsel should be getting ready for criminal indictments instead of EEO discrimination claims.
Smart, astute companies (such as the ones that rely on yours truly for advice) have developed written operating policies to guide their hiring managers on the use of social media sites. These policies focus searches on relevant, job-related criteria, and frequently use some type of screening mechanism to prevent protected status data from making it to a decision-maker.
Here's a link to a reasonably comprehensive guide on social media use in the hiring process (it's the PDF link with "Internet Use" in the title).
And remember, as with so many things in the employment law world, less is frequently more with respect to these types of inquiries.