Percolating since last year, Colorado’s Employment Opportunity Act has resurfaced in early 2013 and may be on the road to passage. Known as SB13-018, or Senate Bill 18, the Employment Opportunity Act recently passed its third reading in the Senate on February 12, 2013 (final vote, 20 in favor: 15 opposed) and now is before the House. Employers take note – if passed, the Employment Opportunity Act WILL affect the use of credit checks in employment decisions in Colorado, from hiring decisions to running background checks on existing employees.
What Is the Employment Opportunity Act?
The Employment Opportunity Act sets forth the lawful purposes for which an employer or a potential employer may use consumer credit information (consumer credit reports and credit scores). Employers who violate the Employment Opportunity Act may be subject to civil penalties in the amount of $2,500 per violation. Aggrieved employees or prospective employees will be able to file complaints with the Department of Labor. The Department of Labor will be authorized to conduct investigations, hold hearings, and award civil penalties against employers.
Among other things, the Employment Opportunity Act:
- Prohibits an employer’s use of consumer credit information for employment-related decisions unless the employer is a bank or financial institution, the credit report is required by law, or if the information is “substantially related” to the job.
- “Substantially related” to the job means that the position or prospective position is one of “executive or management personnel or officers or employees who constitute professional staff to executive and management personnel” and the position involves one or more of the following duties:
- Setting the direction or control of a business, division, unit, or an agency of a 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.
Employment attorneys in Colorado know that the definition of “executive or management personnel or officers or employees who constitute professional staff to executive and management personnel“, a phrase taken directly from Colorado’s statute regarding non-competition agreements (C.R.S. 8-2-113), has yet to be clearly defined by Colorado courts in non-compete cases. If the Employment Opportunity Act is passed as currently drafted, it appears that Department of Labor Hearing Officers (not judges or lawyers) may get to chime on who constitutes this elusive category of employees.
The full text of the Employment Opportunity Act is available here: Senate Bill 18.pdf.
What Employers Must Comply?
The Employment Opportunity Act would apply to “employers” as defined by Colorado Revised Statute, Section 8-1-101, and also “prospective employers,” which is not defined. Pursuant to C.R.S. 8-1-101, an “employer” means:
- The state, and each county, city, town, irrigation, and school district therein, and all public institutions and administrative boards thereof having 4 or more employees;
- Every person, association of persons, firm, and private corporation, including any public service corporation, manager, personal representative, assignee, trustee, and receiver, who has 4 or more persons regularly engaged in the same business or employment, except as otherwise expressly provided in this article, in service under any contract of hired, expressed or implied.
- Note that an “employer” is not an employer of private domestic servants or farm and ranch labor, nor employers who employ less than 4 employees in the same business, or in or about the same place of employment. The definition also excludes any state or local law enforcement agency.
Presumably, a “prospective employer” would be an employer considering a new applicant that otherwise fits the definition above. Hypothetically, however, if you regularly employ 3 employees, just hired a 4th and are considering a 5th, may you be properly excluded? Without a definition of “prospective employer,” it is not entirely clear.
If passed, the Colorado Employment Opportunity Act could be effective as early as July 1, 2013 and would apply to any acts related to the use of credit checks after that date.
We will monitor the status of this new legislation affecting employers in Colorado and will post an update with more information as it becomes available. Stay tuned.