The Consumer Financial Protection Bureau issued guidance Thursday warning companies about legal requirements when using technology to track their workers' performance, a practice that has become more widespread with the emergence of the so-called gig economy.
Though companies have been using background checks for years, the CFPB is focused on modern surveillance practices that use sophisticated systems to track truck drivers, rideshare drivers and nurses, among many other occupations.
For example, some employers require workers to install apps on their personal phones that monitor their conduct, which may be used to assess their performance, the bureau said. Researchers have long documented the extensive warehouse surveillance systems used by
Under the Fair Credit Reporting Act, companies are required to obtain workers' consent, allow them to dispute inaccurate information and provide transparency about the use of third-party consumer reports. Companies also have an obligation to give notices to an employee or prospective worker if the company takes an adverse action.
"There are reasons why we want to put some reasonable limits on the workplace … it's so that we have a society that progresses forward rather than is just about abuse of power," Chopra said at the field hearing Thursday. "I really think all of this is actually about figuring out how do you give workers in the workplace the sense to share feedback about things, raise questions about how to do something better, how to actually improve patient care, productivity and more."
Congress passed the FCRA in response to concerns about the impact of credit reporting on consumers' employment. The law applies both to information used for initially evaluating a consumer for employment and to information used for ongoing employment purposes.
The CFPB noted that some reports are designed to predict worker behavior — including the likelihood of workers engaging in union organizing activities or the probability that a worker will leave their job. Automated systems may use data on worker performance, availability, and historical patterns to reassign team members or to flag potential performance issues that could lead to automated warnings or disciplinary actions including firing — with no human oversight, the bureau said.
"Workers shouldn't be subject to unchecked surveillance or have their careers determined by opaque third-party reports without basic protections," Chopra said in a press release announcing the guidance. "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."
Since Chopra became director of the CFPB in 2021, the agency has been keenly interested in reining in technology firms and the potential for abuse of new technologies as companies across many sectors seek to monitor workers. The CFPB said that technology has made it easier and more cost-effective to track, assess and evaluate workers including those working remotely.
Moreover, employees may not even realize that they are under surveillance, or that their employer is using tools to track productivity including tracking them outside of working hours, the CFPB said. Companies that own and use surveillance tools "might sell worker data to financial institutions, insurers, and other employers," and "certain actions by these surveillance companies may be violating the Fair Credit Reporting Act along with other consumer financial protection laws," the CFPB said in its guidance.
Third-party providers that furnish the reports are considered to be consumer reporting agencies regulated by the FCRA, which imposes an obligation to follow reasonable procedures to assure accuracy, to investigate worker disputes alleging inaccuracies, and to disclose information in a worker's file to the worker upon request, the CFPB said.
The FCRA also includes a prohibition on using such reports for purposes other than what is considered a "permissible purpose."
Background checks that are compiled from databases collecting public records, employment history, collective-bargaining activity or other information about a worker are considered to be "consumer reports" under the FCRA, including reports that have scores assessing a worker's risk level or performance, the CFPB said.
