February 13, 2012 11:00 PM UTC

Employment/Credit Score "Vicious Circle" Bill Up Today

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• by: Colorado Pols

In the Senate Judiciary Committee today, the main event up for debate is Senate Bill 12-003–sponsored by Sen. Morgan Carroll, from the summary text:

The bill creates the “Employment Opportunity Act”, which specifies the purposes for which consumer credit information (i.e., consumer credit reports and credit scores) can be used by an employer or potential employer (jointly referred to as “employer”). Specifically, the bill:

Prohibits an employer’s use of consumer credit information for employment purposes if the information is unrelated to the job;

Requires an employer to disclose to an employee or applicant for employment (jointly, “employee”) when the employer uses the employee’s consumer credit information to take adverse action against him or her and the particular credit information upon which the employer relied;

Authorizes an employee aggrieved by a violation of the above provisions to bring suit for an injunction, damages, or both; and

Requires the department of labor and employment to enforce the laws related to employer use of consumer credit information.

This bill is based on the premise that many people who lose their jobs, as has happened a great deal in the last few years, encounter temporary financial problems as a direct result that can impact their credit rating. Since credit scoring is often a major criteria used by human resources departments to judge an applicant’s reliability or trustworthiness, people in the job market  can find themselves in a “vicious circle” of poor credit denying them job opportunities: which in turn denies them the ability to repair their credit. At best, it’s a trap set by well-meaning HR people who never bothered to think of a way for people to escape it–not to mention erroneous data.

This isn’t the first time that Sen. Carroll has run this bill, which has met Republican opposition for the usual “don’t tie the hands of business” reasons–but there are now more people out there looking for work as the economy recovers who would benefit. This is also one of the bills we’ve seen over the years that sounds right up the alley of a Democratic-controlled Senate…until a fellow Democrat mysteriously appears out of nowhere to kill it (see: payday lending reform).

So we suppose you’d better watch out for that, too.