Colorado is the latest state to enact a law that prohibits employers from performing a credit history or credit check for hiring or other employment purposes.
The Employment Opportunity Act (Senate Bill 18) applies to private sector employers with four or more employees. It prohibits employers from using “consumer credit information” in making employment decisions. This includes evaluating a person for employment, hiring, promotion, demotion, reassignment, adjustment in compensation level, or retention as an employee. “Consumer credit information” means written or oral information bearing on an applicant or employee’s creditworthiness, credit standing, credit capacity, credit history, or credit score.
The law makes exceptions for certain types of employers and positions. These include banks and financial institutions, employers that are legally required to check credit information, executive or management personnel for specified purposes, and federal contractors having defense, national security or similar government contracts.
The law does not create a private right of action, but it allows an applicant or employee to file a complaint with the Colorado Division of Labor. Civil penalties up to $2,500 can be awarded to an aggrieved individual. The act is effective July 1, 2013.
California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont and Washington also have laws that restrict the use of credit-related information for employment purposes.
Colorado employers do not need to post a notice Employment Opportunity Act. If you need a current Colorado All-On-One Labor Law poster, click here or give us a call. We are happy to help.