You don't need access to sensitive personal information before deciding to go with your nepotism hire anyway. It should be illegal to require this type of bull.
I don't want you speaking to any of my friends or family because you should not have access to my personal life. Period. You don't need to know who I hang out with, what I do on my own time, or where I sleep.
All you need to know is that I am interested in working here, can do the job adequately, won't steal, and won't disappear.
You don't need to be able to screen me for my political affiliation, social network presence, religious affiliation, anything. It's “illegal” for employers to do some of these things, but think about this from a rational perspective. Who is monitoring your bosses computer to make sure they didn't check your information? Are you going to try to sue them to ensure they didn't? That's costly and good luck finding a lawyer to take your case. You can't just bank on “yeah it's illegal so they won't do that stuff” because if you do that, you ignore all of history where 99.999% of anyone who gets ahold of power almost immediately begins abusing it and waving it in your face like a Kanye-level jerk.
I don't even think they should be allowed to ask for your home address, either. Zip codes are easy predictors of wealth. You can google an address and see that it's an apartment. It's all unfair and rigged against people who weren't born wealthy.