It definitely happens; here's a case from last year that the ACLU was looking at: http://www.aclu.org/blog/technology-and-liberty/want-job-pas...
The insidious thing about this is not if it happens for people looking for tech jobs (they're generally clued in enough to refuse, or go somewhere else, or make a fake Facebook account filled with stuff like "I love working so much!" and "I saved a man's life with a quick appendectomy at my volunteer gig"). People looking for lower-tier jobs are in less of a position to be able to refuse.
It's true, this seems very uncommon in the wild. However I would be surprised if it was completely non existent.
Whilst this may be a non-story at least it shows that people are thinking about these things and waking up to the things that suddenly become possible once your entire life is lived online.
If I were more cynical I might think that this story was intentionally stirred up by someone who had an interest in gauging the public reaction to this.
The magnitude of coverage for something "uncommon in the wild" (I would add, 'if at all') supports your cynical side.
Re:Passwords and interviews
by calpaterson on Monday March 26, 2012 @12:35PM
(#3757427)
Yes. My suspicion is that this is a backdoor lobbying effort by Facebook to get some TOS-protecting legislation passed, e.g. http://www.kcra.com/news/30750931/detail.html
For those who watch TDS/Colbert, they poke fun from time to time at Fox News et al for making up scary things that kids supposedly do - the latest was soaking tampons with vodka and sticking them up your butt. This feels like the "soaking tampons with vodka" of the professional world. Someone probably has done it, but it is really uncommon and not worth losing sleep over.