American companies are far more likely than their European counterparts to use workplace software that punishes poor performance, and the reason comes down to law, not technology, according to new OECD research covering more than 6,000 firms across six countries.
A Massive Enforcement Gap
Software that sanctions underperforming employees is used by 67% of U.S. firms, compared to just 4% in France, Germany, Italy, and Spain combined, and 1% in Japan. That’s roughly a sixteen-fold difference. Tools that reward good performance follow a similar pattern, at 83% in the U.S. versus 13% in Europe.
Adoption of workplace software overall is high nearly everywhere, ranging from 90% in the U.S. down to 40% in Japan. But the real divide isn’t whether companies use these tools, it’s how far they push them. U.S. firms typically run ten or more distinct tracking and evaluation functions, while European firms average three to five, and nearly a third of Japanese adopters use only one.
Monitoring Follows the Same Pattern
U.S. employers track the speed of employees’ work at nearly five times the European rate, 72% versus 15%, and monitor the tone or content of calls, emails, and messages at roughly nine times the rate, 55% versus 6%. Visible performance leaderboards appear in half of U.S. workplaces, compared to just 7% in Europe.
Why Law, Not Technology, Explains The Divide
Researchers point to regulatory structure as the main driver. EU rules require companies to inform and consult worker representatives before rolling out these systems, while U.S. labor law only requires bargaining in narrower circumstances. That leaves American workers with far less say in how, or whether, these tools get deployed.
Interestingly, Italy and Spain report stronger oversight than France and Germany, despite all four operating under the same EU privacy law. National legislation appears to be the deciding factor: Italy’s 2022 Transparency Decree specifically addresses automated decision-making, and Spain’s 2021 Riders’ Law gives worker councils the right to be informed about algorithmic management. Enforcement has reinforced the pattern, Italian regulators fined a Glovo subsidiary €2.6 million in a related data protection case.
Most Of This Software Isn’t Even AI
The tools driving these numbers usually aren’t artificial intelligence at all. Managers most often cited everyday platforms like SAP, Workday, Oracle, Jira, Asana, and Trello, systems most companies already use for basic operations. That creates a regulatory blind spot: rules like the EU’s AI Act target AI specifically, potentially leaving conventional monitoring and scoring software unregulated even when it performs identical functions.
Workers May Not Understand What’s Tracked
While the vast majority of managers say employees are informed about the software in use, researchers expressed doubt that this reflects what workers actually understand. A striking number of European managers, 69%, claimed their tools don’t collect data on individual workers at all, a response researchers suspect may reflect confusion about the tools or cautious answers shaped by privacy law. Where data collection was acknowledged, most workers couldn’t opt out, and in the U.S., more than half of managers said employees couldn’t even request corrections.
What’s Next
EU officials have signaled renewed interest in regulating algorithmic management, and researchers are pushing to extend existing worker protections beyond platform-based jobs. Whether new rules gain real teeth, and whether they cover non-AI software, remains unresolved.
