by Mark Wiletsky
Colorado employers need to make sure their background check policies comply with the state’s Employment Opportunity Act, which takes effect July 1. The new law bans employers from obtaining and using credit history information when evaluating applicants and employees. Certain jobs are exempt from the prohibition, but the exemptions are very narrow.
Section 8-2-126 of the Colorado Revised Statutes provides that employers can’t use consumer credit information for employment purposes unless the information is substantially related to an employee’s current or potential job. That means Colorado employers are prohibited from using credit information in employment decisions except when credit or financial responsibility is substantially related to the job.
Any written, oral, or other communication of information that bears on an employee’s creditworthiness, credit standing, credit capacity, or credit history is prohibited from being used for employment purposes. That includes a credit score but not an employee’s name, address, or date of birth associated with a Social Security number.
When deciding whether a position falls within the exemption, employers must carefully analyze whether the job in question meets the law’s parameters. Under the law, “substantially related to the employee’s current or potential job” applies to positions that:
(1) Constitute executive or management personnel or officers or employees who constitute professional staff for executive and management personnel and involve one or more of the following:
- Setting the direction or control of a business or a division, unit, or agency of a business;
- Having a fiduciary responsibility to the employer;
- Accessing customers’, employees’, or the employer’s personal financial information (other than information ordinarily provided in a retail transaction); or
- Having the authority to issue payments, collect debts, or enter into contracts.
(2) Involve contracts with defense, intelligence, national security, or space agencies of the federal government.
The law also prohibits employers from requiring employees to consent to requests for credit reports containing information about their credit score, credit account balance, payment history, savings or checking account balance, or savings or checking account number as a condition of employment unless
- The employer is a bank or financial institution;
- The report is required by law; or
- The report is substantially related to the employee’s current or potential job, the employer has a bona fide purpose for requesting or using information in the report, and the reason is disclosed to the employee in writing.
This topic was covered in more detail in the May 2013 issue of Colorado Employment Law Letter.
Mark Wiletsky is of counsel at Holland & Hart LLP in Boulder, Colorado. He can be reached at 303-473-2864 or mbwiletsky@hollandhart.com.