New Colorado law limits employer use of consumer credit reports

Business owners in Colorado have had their ability to make hiring decisions based on consumer credit reports highly restricted. The Gazette reported that the Employment Opportunity Act ensures that managers in the state can only request credit data from workers or applicants if it is significantly related to the job they have or are applying for. The source noted that law enforcement agencies are exempt from the new measure.

Stipulations in the legislation state that credit data may be collected by employers only when related to a high-level positions. Jobs that are managerial, executive or involve financial responsibilities are open for consumer credit investigations, while all others are not. However, The Gazette noted that any past or current employment involving contracts to government agencies can be analyzed, regardless of the position held.

Under the new law, hiring managers will also have the option - but are not required - to give applicants a chance to explain any unsettling consumer credit data that may arise from a credit check. As is the case in several states, companies must notify an applicant if any credit data was used to deny employment.

The Colorado General Assembly's website says the act was signed into law by Governor John Hickenlooper on April 19.

As companies seek to comply with new federal and state laws that are being passed regarding background screening, the option to hire a third party service to conduct applicant checks is becoming more attractive. These firms provide professional service from a number of highly trained screening experts who are up-to-date on the latest legislation.