Workplace Monitoring Technologies May Trigger Fair Credit Reporting Act, CFPB Warns

November 14, 2024

What's New

Employers that use workplace monitoring technologies may be risking liability under the Fair Credit Reporting Act (FCRA), the Consumer Financial Protection Bureau stated in guidance published October 24.

Some workplace technology providers may satisfy the definition of a “consumer reporting agency” (CRA) 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 software for monitoring employee productivity and supplying algorithmic scores and other reports about workers.

Third-party consumer reports that could trigger the FCRA include those that:

• track workers’ driving habits,
• measure the time workers spend on tasks,
• record the number of messages workers send,
• document workers’ off-task web browsing,
• take screenshots of computers, or
• measure keystroke frequency.

What It Means

Reports produced by these technologies 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 employees’ consent, giving employees a copy of their consumer report before taking adverse employment actions, and allowing workers to dispute inaccurate information.

An employer’s negligent failure to comply with the FCRA could result in liability for actual damages plus attorney’s fees. A willful violation can carry damages up to $1,000 plus punitive damages. A knowing violation could carry a civil penalty of up to $4,705.

What You Should Do

Employers may wish to review how they notify employees of any ongoing monitoring and employment decisions based on that monitoring.

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