Monday evening the Senate Judiciary Committee approved Senate Bill 3, the Employment Opportunity Act, sponsored by Sen. Morgan Carroll, D-Aurora. The Act prohibits pre-employment credit checks that some companies use to screen candidates. Sponsors of the bill say such credit checks can prevent people with low credit scores from finding employment. The bill passed 4-3 on a party line vote.
“Credit scores were never intended to be used in hiring practices,” Carroll said in a statement released after the bill made it through committee. “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. 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.
The bill will now be considered by the full Senate. The bill is sponsored in the House by Rep. Randy Fischer, R-Fort Collins. Republicans who voted against the bill in committee did not quickly return phone calls seeking comment.