The Consumer Financial Protection Bureau has issued guidance warning that employers who use specific types of workplace monitoring technologies may inadvertently be risking liability under the Fair Credit Reporting Act (FCRA).
Some workplace technology providers may satisfy the definition of a “consumer reporting agency” under the FCRA, according to CFPB’s Circular 2024-06—entitled Background Dossiers and Algorithmic Scores for Hiring, Promotion, and Other Employment Decisions. “Consumer reporting agencies” include providers that develop and maintain applications that monitor employee productivity and provide algorithmic scores and other reports about workers. Therefore, any reports that these technologies produce may be considered “consumer reports” triggering FCRA obligations.
Employers who use these technologies for employment purposes—such as promotion, reassignment, or retention—may have to follow FCRA notice procedures—such as obtaining employee consent, giving employees a copy of their consumer report before taking adverse employment actions, and allowing workers to dispute inaccurate information.
Members of the Center for Workplace Compliance (CWC), our affiliated nonprofit membership association, can read more here.