Excerpted from a Taft Stettinius & Hollister LLP Blog by Michael J. Zbiegien, Jr.
With the rise in remote work, not to mention better technology, many employers have begun using apps and other services to monitor employees’ activities to track, assess, and evaluate workers. The Consumer Financial Protection Bureau (CFPB) recently issued a Circular stating that employers’ use of the reports generated by those apps and services may be subject to the Fair Credit Reporting Action (FCRA) just like a traditional employee background check.
The FCRA regulates the use of consumer reports for employment and other purposes. A criminal background check of a potential employee that is obtained from a third party is a typical consumer report. To be clear, the FCRA does not prohibit the use of such reports, but rather triggers a series of protections for the employee. And it applies both during the hiring phase and while the employee is working for the employer.
The recent Circular, Consumer Financial Protection Circular 2024-06, provides a laundry list of potential reports beyond a background check that could be subject to the FCRA — reports produced by third parties: “to monitor workers’ sales interactions, to track workers’ driving habits, to measure the time that workers take to complete tasks, to record the number of messages workers send and the quantity and duration of meetings they attend, and to calculate workers’ time spent off-task through documenting their web browsing, taking screenshots of computers, and measuring keystroke frequency.” (If the powers that be are reading this, I type really slowly.)
The CFPB provides two key questions to consider in determining whether the FCRA applies to the specific use of a report:
1. “Does the employer’s use of data qualify as a use for ’employment purposes’ under the FCRA?”
The FCRA has a broad definition of “employment purposes.” It means “evaluating a consumer for employment, promotion, reassignment, or retention as an employee”
2. “Is the report obtained from a ‘consumer reporting agency,’ meaning that the report maker ‘assembled’ or ‘evaluated’ consumer information to produce a report?”
The key here is that the report assembles or evaluates information. The CFPB uses the example of an app that monitors a worker’s driving activity, such as for a delivery driver or an electrician who makes house calls. If the app provides driving scores to employers for employment purposes, that report could be considered a consumer report subject to the FCRA if the app uses data from sources other than the employer receiving report to generate the scores, including data “from other employer-customer or public data sources.”
TAKEAWAY: The FCRA does not ban employers from using these employee-tracking reports, but it does require employers to implement certain procedures if they do.
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