On July 1, 2013, the State of Colorado will be the 9th state to restrict an employer’s right to use credit reports when making employment related decisions.
Should an employer wish to procure a credit report for employment related purposes, it must be “substantially related to the employee’s current or potential job.” The statute defines substantially related to mean one of two types of positions.
1. A position that constitutes executive or management personnel (or officers or employees who constitute professional staff to executive and management personnel) and which involves one or more of the following:
- sets the direction or control of a business, division, unit or an agency of the business;
- owes a fiduciary responsibility to the employer;
- has access to customers’, employees’ or the employer’s financial information; or
- has the authority to make payments, collect debts or enter into contracts.
2. A position that involves contracts with defense, intelligence, national security, or space agencies of the federal government.
ADDITIONALLY, the employer must also have (1) a “bona fide purpose†for requesting or using the information in a credit report and (2) the employer must disclose this “bona fide purpose†to the applicant/employee.
“Colorado recently became the ninth state to prohibit employers from using credit information for employment purposes. In the last few years, eight other states have also passed laws which, subject to few exceptions, regulate ban employers’ ability to use credit information in making employment decisions. Colorado’s law, called the “Employment Opportunity Act,” Colo. Rev. St 8-2-126, was signed into law on April 19, 2013 and goes into effect on July 1, 2013.â€
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