Understanding the 3/2 Rule of Employee Productivity
On April 19, 2013, Colorado Governor John W. Hickenlooper signed Senate Bill 13-018 which significantly restricts employers from using consumer credit reports in making an employment decision. Colorado became the ninth state (after California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont, and Washington) to regulate employers’ use of consumer credit reports in the hiring process. The law will take effect July 1, 2013.
This trend toward regulating employers’ use of credit reports is expected to continue at both the federal and state level, with proposed legislation being introduced in several states (Florida, New Jersey, New York and Pennsylvania). One can’t help but think that these changes are being made in response to the Equal Employment Opportunity Commission (EEOC) aggressively investigating employer’s use of credit reports. The bill prohibits private sector employers with 4 or more employees from utilizing “consumer credit information” for employment purposes.
The law states that credit checks can be performed on “executive or management personnel” who perform the following functions:
- Setting the direction or control of a business, division, unit or an agency of a business
- A fiduciary reasonability to the employer
- Access to customers, the personal or financial information of a customer, employee or the employer
- Authority to issue payment, collect debts or enter into contracts
These new trends aren’t prohibiting employers from using credit reports all together, just limiting screening to positions that involve financial responsibility.
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