This page is to inform our clients of changes in the laws and regulations regarding employment screening.
COLORADO SENATE BILL 13-018
Effective July 1, 2013, Colorado becomes the ninth state to restrict an employer’s right to obtain and use credit information for making employment decisions. Colorado joins California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont and Washington.
Senate Bill 13-018 – signed into law by Governor Hickenlooper on April 19 – creates the “Employment Opportunity Act”, which specifies the purposes for which consumer credit information (i.e., consumer credit reports and credit scores) can be used by an employer or potential employer (jointly referred to as “employer” and excludes any state or local law enforcement agency).
More specifically, the bill:
- Prohibits an employer’s use of consumer credit information for “employment purposes” unless the information is “substantially related to the employee’s current or potential job”;
- Requires an employer to disclose to an employee or applicant for employment when the employer uses the employee’s consumer credit information to take adverse action against him or her and the particular credit information upon which the employer relied;
- Authorizes an employee aggrieved by a violation of the above provisions to bring suit for an injunction, damages, or both; and
- Requires the department of labor and employment to enforce the laws related to employer use of consumer credit information.
The bill defines each of the following terms:
- Employee means every person who may be “permitted, required, or directed by any employer in consideration of direct or indirect gain or profit, to engage in any employment and includes an applicant for employment.”
- Employment purposes refers to the evaluation of a person for “employment, hiring, promotion, demotion, reassignment, adjustment in compensation level, or retention as an employee.”
- Substantially related to the employee’s current or potential job means the information in the credit report is related to the position for which the subject is being evaluated, because the position is one for executive or management level personnel or officers, or employees who constitute professional staff to executive and management personnel, and the position involves one or more of the following:
- Setting the direction or control of a business, division, unit, or an agency of the business;
- A fiduciary responsibility to the employer;
- Access to customers, employees, or the employer’s personal or financial information, other than information customarily provided in a retail transaction;
- The authority to issue payments, collect debts, or enter into contracts; or
- Involves contracts with defense, intelligence, national security, or space agencies of the federal government.
The Colorado Division of Labor will be in charge of enforcing the act. Someone claiming injury because of a violation of the act is entitled to an administrative hearing and, if the prevailing party, recovery of a civil penalty not to exceed $2,500.
Currently, Georgia, Indiana, Florida and Kentucky are considering similar bills that would limit credit reports for employment purposes