Emerging Worker-Tracking Tools May Require Consent

Author: Michael Cardman, Brightmine Senior Legal Editor

October 25, 2024

New technologies used to track and analyze workers and job applicants often will be governed by the Fair Credit Reporting Act (FCRA) if they are used in hiring, promotion and other employment decisions, a federal consumer watchdog is warning employers.

As a result, employers that use these new technologies generally will need to take steps to comply with FCRA, such as obtaining consent, notifying workers before making an adverse employment decision and allowing workers to dispute inaccurate information.

Much like traditional credit reports or background checks, new types of "background dossiers" used to assess and predict workers' productivity, propensity to unionize, social media presence and other behavior may qualify as consumer reports under FCRA, the Consumer Financial Protection Bureau (CFPB) said in a new circular. The CFPB's circulars are intended to promote a consistent approach across the various agencies tasked with enforcing federal consumer laws.

Surveillance-based tools that score workers using artificial intelligence (AI) and apps that employers may require workers to install on their personal phones to monitor their conduct and assess their performance also are likely to be covered by FCRA, according to the circular.

“Workers shouldn't be subject to unchecked surveillance or have their careers determined by opaque third-party reports without basic protections,” CFPB Director Rohit Chopra said in a statement. “The kind of scoring and profiling we've long seen in credit markets is now creeping into employment and other aspects of our lives. Our action today makes clear that longstanding consumer protections apply to these new domains just as they do to traditional credit reports.”