Some workers who raised safety issues were allegedly blacklisted
A company that allegedly sold workers' personal details, including union activities, to building firms is to be prosecuted by the information watchdog.
The Information Commissioner's Office (ICO) said the Consulting Association, in Droitwich, had committed a "serious breach" of the Data Protection Act.
The ICO said a secret system had been run for over 15 years to enable firms to unlawfully vet job applicants.
Unions have called on the government to outlaw "blacklisting" practices.
A spokesman for the Department for Business said it did have the power to make blacklists illegal and would "review whether to use this power if there was compelling evidence that blacklists were being used".
Around 40 construction companies who subscribed to the scheme would send lists of prospective employees to The Consulting Association, who would then warn them about potential troublemakers.
Some of the notes uncovered by an ICO raid on the association's offices included descriptions such as "ex-shop steward, definite problems", "Irish ex-Army, bad egg".
Other notes related to workers who had raised concerns over health and safety issues on sites, such as asbestos removal.
The owner of the Consulting Association Ian Kerr - which is now believed to have ceased trading - faces prosecution and a £5,000 fine if found guilty of breaching the Data Protection Act.
The act outlaws the collection and distribution of secret information on individuals without their knowledge.
Deputy information commissioner David Smith on the data protection breach
Deputy Information Commissioner David Smith said the company should have registered itself with the ICO and therefore qualified for a "clear prosecution" under the act.
He said he was also deeply disappointed that firms he described as "household names" had been involved in an allegedly illegal system for many years.
He said they would be issued with a legal order not to repeat the offence, and if they breached it they too would face prosecution.
"You would have thought they would have got the data protection message by now," he said.
The firms include well-known construction companies such as Taylor Woodrow, Laing O'Rourke and Balfour Beatty.
Balfour Beatty said it would co-operate with the ICO investigation, and that it did not condone the use of blacklists "in any circumstances".
Other companies either said they would conduct their own investigation, or had "inherited" their links with the Consulting Association from previous firms they had taken over.
The Consulting Association was unavailable for comment.
One worker told the BBC he believed he was on the alleged blacklist, because he had found it hard to get work ever since winning a case for unfair dismissal in 2000.
He said that even though he and fellow workers won their case, and then defeated the firm again on appeal, he had suffered as a result.
"Prior to 2000 I could get work on the most prestigious of contracts, but since then not a single agency has called to offer work," he said.
The ICO's revelations led to calls for the government to bring forward anti-blacklisting regulations which were prepared but never introduced.
Alan Ritchie, general secretary of the building workers' union Ucatt, said: "Blacklisting remains rampant in the 21st Century.
"We will be writing to the government immediately, demanding that they bring forward the existing regulations and introduce them into law immediately. It is the only way to protect the rights of trade union members."
TUC general secretary Brendan Barber backed the call to introduce strict new laws, calling the revelations "deplorable".
"Not only has information about workers' union membership been recorded and shared, but personal details have also been revealed," he said.
"The government must act now and bring in the 1999 blacklisting regulations, to give workers proper protection and access to redress."
Labour MP John McDonnell said: "This latest expose of blacklisting demonstrates that blacklisting is still rampant in some industries.
"The government must act swiftly now to outlaw blacklisting once and for all.
"It is widely suspected that the government caved in under pressure from employers' organisations when I raised this issue last time in Parliament.
"This new evidence demonstrates that the government needs to act, and act now, to prevent this discrimination that can blight the lives of many workers."
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