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Called my employer trying to verify if I worked there. A debt collector farmed them out. I thought you could only perform verification for banks (loans) & jobs. They had my social security number too.  Why would someone give that to them & are they allowed to have that without me knowing?

I am unsure where you received your information.  They are allowed top call your employer until he tells them not to.  As far as your SS#, well you probably gave that to them when the credit application was filled out.  It was also required top do a credit check.
For accurate information, you can go here:
Read up on your rights here, get template letters to send and also make a complaint at this government site:  http://www.consumerfinance.gov/
Also file a complaint with your State Attorney General's office.
List of State AG’s offices:  http://consumerfraudreporting.org/stateattorneygenerallist.php