Personal Privacy in an Information Society. The Employment Relationship


A comprehensive study of the effects of record keeping on personal privacy must include records generated in the context of the relationship between employer and employee. The employment relationship affects most people over the greater part of their adult lives, and is basic to the economic and social well-being of our society. Loss of work is for most people a considerable hardship. Its consequences for an individual and for his family can be disastrous.

When an individual applies for work today, it is not unusual for the employer to ask him to divulge a considerable amount of information about himself, and to allow the employer to verify and supplement it. In addition, the individual may be examined by the company physician, given a battery of psychological tests, interviewed extensively, and subjected to a background investigation. After hiring, the records the employer keeps about him will again expand to accommodate attendance and payroll data, records concerning various types of benefits, performance evaluations, and much other information. All of this creates a broad base of recorded information about the employee which various entities unrelated to the employee-employer relationship will view as a valuable resource.

It is the creation, maintenance, use, and disclosure of these employee records which concern the Commission. At what point do inquiries about applicants and employees become unduly intrusive? What does fairness demand with respect to the uses and disclosures of records that support an employment decision? What expectation of confidentiality can an individual legitimately have with respect to the records his employer makes and keeps about him?

The Commission's examination of these questions has concentrated on the record-keeping practices of large private corporations. The Commission considered examining public-sector practices as well, but was dissuaded by time, budget, and the substantial amount of work already completed or in progress on personnel record keeping in the public sector. Several recent studies by Congressional committees and government agencies have examined public-sector employment practices, information collection techniques, and personal-data record systems.1 The Commission's study of how the Privacy Act of 1974 affects record keeping in the Federal government has illuminated the strengths and weaknesses of those privacy protection rules and procedures in the context of the Federal employment relationship. And the Project on Personnel Practices, Computers, and Citizens' Rights being carried out for the National Bureau of Standards by Professor Alan F. Westin, with partial Commission funding, has analyzed personnel record-keeping policy and practice in several agencies of Federal, State, and local government.

Within the private sector, the Commission also had to choose between looking at the record-keeping practices of a cross section of employers or confining its inquiry to the practices of sizeable organizations. The Commission concluded that concentrating on the employment-related record-keeping practices of larger organizations had some strong advantages. Although they constitute less than one percent of the many millions of businesses in the country, firms with over 1,000 employees account for more than 40 percent of total business employment. 2 Records also tend to matter more in large organizations. Because management can deal on the basis of personal knowledge or acquaintance with only a limited number of employees, records play an important role in employment decision making. Larger firms also tend to provide a wider range of benefits and frequently administer their benefit programs themselves. Thus, their records about applicants and employees contain more information than those of smaller employers. Of great importance to the Commission, moreover, was the fact that large private corporations lead in applying new information processing technologies to personal-data record keeping and thus have had to deal with privacy protection concerns earlier and more aggressively than most other organizations.

For these reasons, the analysis and recommendations that follow have focused on records generated in relationships between individuals and large, private-sector employers. The Commission does, however, believe that the limited amount of work it was able to do on the personnel record-keeping practices of small organizations warrants more general application of the principles underlying its recommendations.