Effective July 1, 2013, Colorado employers (public and private) will be prohibited from using consumer credit information for employment purposes absent a showing that the information is substantially related to either a current or potential job. The law excludes state and local law enforcement agencies.
The new law defines consumer credit information to include written and oral information concerning a consumer’s creditworthiness, credit standing, credit capacity, or credit history. The language in the law, “substantially related to the employee’s current or potential job,” means that the position is an executive or management job and involves one or more of the following duties:
• Setting the direction or control of a business, division, unit, or an agency of a business;
• fiduciary responsibilities 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.
When consumer credit information is used under the above guidelines, the employer may provide the applicant or employee an opportunity to explain any unusual or mitigating circumstances that may not reflect on money management skills but are attributable to other factors such as layoff, identity theft, or divorce.
Additionally, an employer cannot require an employee to consent to a request for a credit report that contains information concerning credit score, credit account balances, payment history, savings or checking account balances or savings or checking account numbers as a condition of employment unless the employer is:
• A bank or financial institution,
• the report is required by law, or
• the information is substantially related to the employee’s current or former job and the employer has a bona fide purpose for request or imposing information in the credit report and is disclosed in writing to the employee.
An employer that uses consumer credit information to take adverse action against an employee or an applicant will need to advise the employee in writing. Applicants must be advised in the same medium in which the application was made.
The Director of the Colorado Division of Labor and Employment will be responsible for enforcing the provisions of this law and providing a procedure for complaints to be filed with the states. The law provides that complaints are to be promptly investigated and a decision issued within 30 days after a hearing. Civil penalties up to $2,500 may be awarded for violations.