Legislation Will Protect Job Seekers from Discrimination Based on Credit History

Monday, February 13 2012

Impassioned testimony takes the hearing into the evening

DENVER – Today, the Senate Judiciary Committee approved Senate Bill 3, the Employment Opportunity Act, sponsored by Senator Morgan Carroll (D-Aurora). The Employment Opportunity Act prohibits abusive credit check practices that can unfairly limit a Coloradan’s ability to find employment. Many employers currently use a credit report as a hiring factor. This can prevent many hard-working Coloradans who have low credit scores from finding employment. Those affected by this practice often include veterans who have missed financial payments due to deployment, single parents, as well as individuals who incur debt due to an unforeseen illness.

Senator Carroll offered the following comment on tonight's committee passage of the Employment Opportunity Act:

“Credit scores were never intended to be used in hiring practices.  Tying credit scores with employment opportunity creates a vicious circle that unfairly punishes struggling Coloradans.  We should be doing everything in our power to get citizens back to work, and this legislation ensures that we are removing unnecessary punitive barriers and helping citizens get back on their feet.”

Senate Bill 3 prohibits employers from using credit report information unless it is directly related to the position for which a candidate is applying, such as a money or asset management role.  If the employer decides not to hire an individual based on information from their credit report, they must disclose this to the applicant.  The employer also may allow a prospective employee to explain any negative information on the report.  Employers found in violation of this law would be subject to civil penalty.  Seven other states have enacted similar laws to prevent credit report discrimination.

Approximately 25.5 percent of Americans currently have poor credit compared with a historical average of 15 percent, and it is estimated that up to 60 percent of employers currently run credit checks on prospective employees.  Credit reports can contain inaccurate information, provide misleading indicators about a person’s financial responsibility, and fail to account for unavoidable circumstances such as illness, identity theft, or job loss. The Employment Opportunity Act will prevent workers from being denied employment based on incomplete and potentially faulty information.

The Employment Opportunity Act is part of the Senate Majority’s “Colorado Works Jobs Package,” a series of bills focused on increasing employment in the state.

The bill will now be considered by the full Senate.