The CFPB has issued a circular regarding using background dossiers and algorithmic scores for hiring, promotion, and other employment decisions. It says the Fair Credit Reporting Act (“FCRA”) governs certain employment-related decisions made by employers using background dossiers obtained from third parties.
The circular says these dossiers are consumer reports under the FCRA, and employers must comply with FCRA obligations, including the requirement to obtain a worker’s permission to procure a consumer report, the obligation to provide notices before and upon taking adverse actions, and a prohibition on using consumer reports for purposes other than the permissible purposes described in the FCRA. It also says third-party providers of these dossiers are consumer reporting agencies and must adhere to FCRA requirements.
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