Colorado and Nevada Restrict Employers' Use of Credit Checks
Colorado’s restriction against employers’ use of credit reports for employment purposes goes into effect on July 1, 2013. Colorado is the ninth state to restrict employers’ use of credit checks in hiring and retention decisions and follows California, Maryland, Connecticut, Hawaii, Illinois, Oregon, Vermont and Washington, which have all passed similar legislation.
Similar to the other state restrictions, Colorado employers will only be able to run credit checks under specific employment contexts as outlined by the law. However, banks and financial institutions as well as employers who are required by law to procure consumer credit reports are exempted from the prohibition.
Less than a month after Colorado signed the new bill into law, Nevada also passed a similar law on May 25, 2013, becoming the tenth state at this time. Nevada employers should be aware that the statute will go into effect on October 1, 2013.
Under Nevada’s new law, employers are prohibited from making employment decisions conditioned on a consumer credit report or other credit information; that is to say, the credit report cannot be the sole consideration in rejecting a candidate. And as is consistent with similar laws from the other states, the Nevada law also contains exemptions for those employers that must run credit reports under state or federal law or if running such a check would be considered a relevant tool because it is job-related. According to the statute, the “job-relatedness” exception is established if the duties of the position involve one of the following:
- responsibility for financial assets or employment with a financial institution
- access to confidential information
- managerial or supervisory responsibility
- direct exercise of law enforcement authority
- responsibility for or access to another person's financial information
- employment with a licensed gaming establishment
Employers in Colorado and Nevada should review their existing policy on usage and credit checks in hiring and make any appropriate changes to conform to the new statutes.
