The Consumer Financial Protection Bureau (CFPB) issued a strong warning to industries on Thursday, cautioning companies about the improper use of digital surveillance and artificial intelligence (AI) tools to monitor employees.
According to newly released guidance, businesses that rely on third-party entities to gather and analyze data from digital badges, AI systems, and other workplace monitoring tools may be in violation of the Fair Credit Reporting Act (FCRA). The CFPB emphasized that under the FCRA, employers must secure workers’ consent before using third-party consumer reports and must be transparent about how this data is used for disciplinary actions. Additionally, employees should have the right to dispute any inaccuracies.
While the new directive specifically addresses third-party assessments, it also extends to data collected through employer-mandated surveillance applications on workers’ personal devices.
CFPB Director Rohit Chopra expressed concerns over how AI-driven models classify and evaluate employees, often making assumptions about individuals without their knowledge. Speaking on Thursday, Chopra warned that such data can contribute to the development of background profiles and reputation scores, which may impact hiring, promotions, and job assignments. He further noted that these reports are sometimes sold for financial gain.
Julie Su, U.S. Secretary of Labor, joined Chopra in addressing the issue, stressing the need to uphold human dignity and fairness in the workplace. She reiterated that AI-generated employee data must be limited in scope, responsibly handled, and adequately protected, referencing the agency’s workplace AI guidelines released on October 16.
Chopra also raised concerns that digital surveillance tools may expose private details that employers should not have access to, such as a worker’s involvement in labor unions. He criticized the reliance on opaque algorithms, which he said create misleading assessments that could negatively impact employees’ careers.
In the healthcare sector, for example, many nurses are required to wear tracking-enabled badges, with data being sent to AI-powered monitoring companies. However, Chopra argued that evaluating nurses based solely on time spent in patient rooms fails to reflect the complexity of their work, overlooking crucial moments like discussing cases with colleagues or assisting patients’ families.
The risk, he explained, lies in incomplete data being used to generate inaccurate reports, potentially affecting a nurse’s future job prospects if another employer relies on the same monitoring system.
Jamie Brown, a critical care nurse and president of the nation’s largest nurses’ union, echoed these concerns, describing employer surveillance technologies as highly intrusive. She recalled a previous job where digital tracking badges monitored staff movements, even measuring the duration of restroom breaks.
Brown pointed out that while AI-driven technologies in hospitals are often marketed as tools for improving patient care, they frequently serve to monitor healthcare workers instead, potentially violating both employee and patient privacy. Additionally, she criticized the way algorithms influence staffing decisions, often prioritizing cost-cutting over quality care.
The CFPB’s warning underscores the growing debate over workplace surveillance and raises significant questions about balancing technological advancements with employee rights and privacy protections.
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