WASHINGTON— The Consumer Financial Protection Bureau said it has issued guidance to protect workers from “unchecked digital tracking and opaque decision-making systems.”
The guidance warns that companies using third-party consumer reports — including background dossiers and surveillance-based, “black box” AI or algorithmic scores about their workers — must follow Fair Credit Reporting Act (FCRA) rules.
“This means employers must obtain worker consent, provide transparency about data used in adverse decisions, and allow workers to dispute inaccurate information. As companies increasingly deploy invasive tools to assess workers, this ensures workers have rights over the data influencing their livelihoods and careers,” the CFPB said.
“Workers shouldn't be subject to unchecked surveillance or have their careers determined by opaque third-party reports without basic protections,” said CFPB Director Rohit Chopra. “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.”
The CFPB's circular addresses the use of third-party consumer reports by employers to make employment decisions about their workers.
“These reports increasingly extend beyond traditional background checks and may encompass a wide range of information and assessments about workers. 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 CFPB said.
Currently, such consumer reports may be used to:
- Predict worker behavior: This includes assessing the likelihood of workers engaging in union organizing activities or estimating the probability that a worker will leave their job, potentially influencing management decisions about staff retention and engagement strategies
- Reassigning workers: Automated systems may use data on worker performance, availability, and historical patterns to reassign team members
- Issue warnings or other disciplinary actions: These consumer reports might flag potential performance issues, leading to automated warnings or recommendations for disciplinary measures (potentially including firing) without direct human oversight
- Evaluate social media activity: Some reports may include analysis of workers' social media presence, potentially impacting hiring or other decisions
“While background checks have long been a part of employment and hiring practices, the emergence of new technologies has expanded the scope and depth of worker tracking. These reports often contain sensitive information unknown to workers, which can significantly impact hiring decisions, job assignments, and career advancement. Inaccurate reports may cause workers to lose job opportunities, face unfair treatment, or suffer career setbacks due to information they did not even know existed, let alone had a chance to dispute,” the CFPB said.