Colorado Bill Would Severely Limit Use of Credit Reports in Employment Screening

A proposed Colorado law would restrict the use of credit reports of job applicants by employers to certain situations, and make employers that use the information adversely indicate what information they relied upon in the credit report to make their decision.

Colorado House Bill 1127 (HB 1127), ‘A BILL FOR AN ACT CONCERNING THE PERMISSIBLE USE OF CONSUMER CREDIT INFORMATION,’ would severely limit the use of credit reports in employment screening. The summary of the bill specifies the purposes for which consumer credit information – such as consumer credit reports and credit scores – can be used in certain situations.

Section 1 of HB 1127 “restricts an employer’s use of consumer credit information for employment purposes and requires an employer to disclose to an employee or applicant for employment when the employer uses the employee’s or applicant’s consumer credit information to take adverse action against the employee or applicant and the particular credit information upon which the employer relied.”

According to HB 1127, an employer shall not use consumer credit information for employment purposes – meaning evaluation of a person for employment, promotion, reassignment, or retention as an employee – unless:

  • The information is substantially job-related, meaning that the position of the person for whom the credit information is sought has access to money, other assets, or trade secrets, or other confidential information; or
  • The position of the person for whom the credit report is sought is any of the following: 1.) A Managerial position; 2.) A position in the Department of Law; 3.) A sworn Peace Officer or other Law Enforcement position; or 4.) A position for which the information is required to be disclosed by law or to be obtained by the employer.

HB 1127 also provides that if an employer relies, in whole or in part, on consumer credit information to take adverse – or negative – action regarding the employee or applicant whose information was obtained, the employer must disclose that fact, and the particular information upon which the employer relies, to the employee or applicant. The employer must make this disclosure to an employee in writing or, for an applicant for employment, using the same medium in which the application was made.

In addition, a person who is injured by a violation of Section 1 of HB 1127 may bring a civil action in a Court to obtain relief, damages, or both. The Court shall award reasonable costs and attorney fees to the prevailing party.

For more information on credit reports and background checks, read articles tagged ‘credit reports’ on ESR News and visit the Employment Screening Resources (ESR) website at http://www.ESRcheck.com.

Founded in 1996 in the San Francisco area, Employment Screening Resources (ESR) wrote the book on background checks with ‘The Safe Hiring Manual’ by ESR founder and President Lester Rosen and is accredited by The National Association of Professional Background Screeners (NAPBS®) . To learn more about Employment Screening Resources, visit http://www.ESRcheck.com or contact Jared Callahan, ESR Director of Client Relations, at 415.898.0044 or jcallahan@ESRcheck.com.

Source:
http://www.leg.state.co.us/clics/clics2011a/csl.nsf/fsbillcont/35D46D2DB9E2B5018725780800803E41?Open&file=1127_01.pdf