Most consumers are aware that their personal data is collected, compiled, analyzed, and sold to third parties for marketing and other purposes. Many employees may not know of similar data collection practices relating to their employment. This data is obtained and compiled through databases, social media sites, and productivity tracking software used by a growing number of companies, especially those with significant remote workforces. The data is packaged and marketed to employers as a way to predict worker productivity and other behaviors.
Last week, the Consumer Financial Protection Bureau (CFPB) issued a circular policy statement warning employers that use of such reports falls under the protections of the Fair Credit Reporting Act (FCRA). FCRA requires that companies using background checks obtain consent before running such reports and advise applicants or employees of adverse actions taken based on such information. The CFPB advised employers that compilation of employee data and use of such information requires employee consent and specific disclosures about the purposes for which such data will be used.
A growing number of vendors are marketing employee profiling information as a predictive tool for productivity, disciplinary, and promotion purposes. Employers considering use of such products should carefully review their data collection and use practices to make certain they comply with FCRA and other data privacy requirements. While the CFPB has not been active with regard to employee protections, the new circular signals an intent by the agency to extend its jurisdiction and enforcement efforts to U.S. workforces.
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