Employers Livid About Anti-Spying Law Passed by Republican Congress

Irony of ironies: U.S. employers are raging apoplectic about a law enacted by a Republican Congress! Only recently publicized, an amendment to the federal Fair Credit Reporting Act prohibits employers from commissioning professional investigators to conduct secret investigations of employees.

Labor relations managers are aghast that they can no longer hire operatives to work alongside employees while ferreting out information about work habits and private lives. Nor can private detectives interview neighbors in the hope of discovering workers on medical leave engaging in nefarious activity such as raking leaves. Workers on strike or active in organizing drives cannot be investigated or spied on without prior consent!

Although there may be no vote this year, a Congressional committee heard business lobbyists' testimony against the anti-spy law in May. After this fall's elections, employers will probably renew their attacks on the restrictions.

The law resulted from a 1996 campaign by banks and department stores to change the Fair Credit Reporting Act (FCRA) to make themselves immune from lawsuits for providing incorrect information to credit agencies. As part of the give and take in Congress, a throwaway proposal restricting company spying slipped through unnoticed by employer lobbyists.

These anti-spy provisions of the FCRA apply when employers hire outside parties--private detectives, credit agencies, lawyers--to investigate the reputation or personal characteristics of job applicants or current employees. The rules do not apply to investigations by supervisors or other management personnel.

Under the rules, an employer may not order an interview-based report without first notifying the employee or employees who are the targets, providing a specific description of the investigation, and obtaining written permission from the employee or employees involved. After the investigation, if the employer decides to take adverse action, it must give the employee in question a complete, unedited copy of the investigation report, including the names and statements of all people interviewed. An employer that violates the rules can be sued for lost wages, attorney's fees, and punitive damages.

FCRA makes it almost impossible to hire private detectives. What worker will voluntarily consent to be investigated by a detective agency? What witness will give incriminating evidence knowing that his or her statements will be shown to the employee being investigated?




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No wonder Mark S. Dichter, partner in the management law firm of Morgan, Lewis, and Backius, complains that as a result of the law, "Employers have little incentive to retain help in investigating theft, misuse of property, safety hazards, fraud, embezzlement, disclosure of trade secrets and other types of misconduct because employers must obtain the target's consent before investigating him or her."

This, whined Dichter, "effectively robs employers of a basic ability to control the workplace."

The FCRA rules are only slightly less demanding when detectives, instead of conducting interviews, merely observe employees or record their movements on a video camera.

An employer does not have to provide the target employee with a specific notice that a third-party surveillance investigation is planned or is in progress. Nonetheless, the employer must inform its workers that it conducts investigations of this sort and obtain written consents. Moreover, no action can be taken unless a complete copy of the surveillance report has been given to the worker and he or she has been given an opportunity to contest the report.


Although most complaints about the anti-spy rules are little more than crocodile tears, some raise genuine concerns. Some fear the restrictions may give an advantage to supervisors and others who engage in sexual or racial harassment. When harassment allegations are made, many employers hire private investigators to determine whether the accuser or the accused is telling the truth. This procedure is impaired if the accused employee must consent. There is also concern that coworkers will not provide corroborating evidence of harassment if the investigator cannot guarantee that their names and statements will be kept confidential.

In May, the House Banking and Financial Services Committee heard employers' emotional testimony on the FCRA. Industry lobbyists urged removal of all restrictions on employee investigations. The Federal Trade Commission--the agency that administers the FCRA--and the AFL-CIO argued that changes should be limited to sexual and racial harassment and other Title 7 investigations.

The future is not clear. Given the conflict between the business/Republican and the labor/Democratic sides, a vote may not be held in 2000. In the next legislative session, however, with a new president in office, business will surely attempt to win back its ability to spy on employees, and unions will need to organize to preserve this important new area of workers' rights.

Robert Schwartz is a labor attorney and educator in Boston. His latest book is How to Win Past Practice Grievances.