In a recent statement, the Consumer Financial Protection Bureau (CFPB) issued a strong warning to firms regarding employee monitoring practices, emphasizing transparency and consent. As tracking technology advances, many companies are using tools like algorithmic scores and third-party reports to monitor staff behavior, productivity, and even potential union organizing activities. The CFPB cautions against collecting or using such data without employee knowledge or permission.
CFPB Director Rohit Chopra highlighted that practices typically seen in credit scoring are now encroaching on employment, raising privacy concerns and potential reputational risks for companies. The CFPB’s new guidance insists that firms using third-party consumer reports must comply with the Fair Credit Reporting Act (FCRA), which includes obtaining employee consent, disclosing data used in any adverse decisions, and providing an opportunity for employees to dispute inaccurate information.
For business valuation professionals, particularly firm partners, this guidance underscores the importance of maintaining clear, ethical policies on employee monitoring. The CFPB’s stance reflects growing scrutiny over workplace privacy, signaling that firms must establish transparent practices and data accuracy to avoid potential legal risks and uphold fair treatment standards.
