In addition to limiting employers’ access to the online accounts of employees and applicants, effective July 1, 2013, Colorado becomes the ninth state to restrict an employer’s right to obtain and use credit information for making employment decisions. Colorado joins California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont and Washington.

Under Colorado’s new law, a covered employer cannot require an employee to consent to a background check containing credit information unless: (1) the employer is a bank or financial institution; (2) the report is required by law; or (3) the report is “substantially related to the employee’s current or potential job,” and the employer has a bona fide purpose for such information, and this information is disclosed in writing to the employee. Further, such information can be used only if it is “substantially related to the employee’s current or potential job.”

The statute provides that the phrase, “substantially related to the employee’s current or potential job,” means the information in the credit report is related to the position for which the subject is being evaluated, because the position is one for executive or management level personnel or officers,  or employees who constitute professional staff to executive and management personnel, and the position involves one or more of the following:

  • Setting the direction or control of a business, division, unit, or an agency of the business;
  • A fiduciary responsibility 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.

More information about the law can be accessed here, or at the link above.