In response to use of “unchecked digital tracking and opaque decision-making systems,” the Consumer Financial Protection Bureau issued guidance Thursday warning companies that any third-party consumer reports they use to surveil workers must be used with worker consent.
The reports under fire from CFPB “increasingly extend beyond background checks,” the federal agency said. This could include, for example, requiring workers to download an app to their phones to monitor conduct and assess performance.
Other examples provided included reports claiming to predict worker behavior, such as the likelihood of union organization or of leaving a job; programs that can reassign workers based on performance, availability and historical data; automated warnings for disciplinary actions that may not have direct human oversight; and reports that analyze workers’ social media accounts.
The guidance reminded employers to follow Fair Credit Reporting Act rules, which require transparency about the data used by such tools in any adverse decisions and allowing workers to dispute inaccurate information.
Consent and transparency are key aspects of FCRA compliance. Workers may not be aware that such information is even used by employers, CFPB said, and many are unaware of what exactly is being collected.
“These protections are essential in an era where worker data is increasingly commodified and used to make critical employment decisions,” the bureau said.
Notably, critical information provided by these reports “is often wrong,” the bureau said.
While CFPB’s new guidance focuses on newer digital tracking systems, background checks — which are a largely accepted part of many employment processes and also subject to FCRA — may also be frequently inaccurate, according to research published in Criminology this year. Credit check companies tend to be loosely regulated, according to the research, and often include mistakes in their reports due to incorrect name spellings, transposed birth date numbers or the existence of common aliases.
ADP, in particular, has faced multiple lawsuits alleging its background checks contained egregiously incorrect information that tanked candidates’ job offers and opportunities. TransUnion also settled a lawsuit in October over an incorrect background check.