Our friend Pam Devata at Seyfarth & Shaw blogged yesterday that Colorado became the ninth state to prohibit the use of employment credit reports in hiring. As Pam reports, Colorado’s law will prohibit employers from using “consumer credit information” for employment purposes.

Colorado joins eight other states–California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont and Washington—in restricting access to consumer credit in the hiring process. The rational for the state action is summarized in the bill’s introduction:

“People who have lost their jobs are more likely to have lower credit scores and yet, as a result of employers’ use of credit information to make employment decisions, people with lower credit scores are less likely to become re-employed. The impact of this practice has been to create chronic barriers to employment for otherwise qualified people who may have a reduced credit score as a result of one or more layoffs in the family, being a single parent, a medical emergency, a divorce, or a death in the family.”

As we have pointed out in the past, the use of credit in the employment screening process is not a standard practice, and it is widely misunderstood. Credit scores are not part of an employment credit report. And many employers have bona fide job qualifications that require consideration of credit. In some instances, use of credit is mandated by statute. In the current economic climate, the states are eager to remove any potential barriers to employment and eliminate any potential discrimination against job applicants who might have bad credit history. And in the absence of a national standard, employers are left with a growing patchwork of state laws with vastly different requirements and considerations.

EmployeeScreenIQ president, Jason Morris, is a frequent speaker at industry events on background checks, global screening, security, recruitment and staffing and he often discusses best practice initiatives as they relate to organizational pre-employment screening programs. Tomorrow, Thursday April 18^th, 11:00-12:00 ET, Jason will present, Caution Ahead: Navigating the New HR Minefield of Recruiting and Screening Laws for HR.com’s virtual conference, Online Staffing and Sourcing. It’s not too late to register for this free event, so take a few moments to sign up today.

Through an engaging, interactive audiovisual presentation that includes the very latest news of the day, Morris will cover the influx of state and federal laws facing employers—including increased EEOC scrutiny of hiring practices and new but untested screening tools such as social media. The media and analysts have also sustained a steady drumbeat that accuses employers of over inflating the importance of background checkswhen negative results are revealed. The presentation will guide organizations and HR professionals in safely navigating the stormy legal waters by keeping informed and taking the proper steps to ensure compliance.

What are you doing February 28^th? Coming to our webinar, 992 Heads are Better than One: Balancing Applicant Rights & What Employers Need to Know, of course! We’ll be discussing the results of our 2013 Employment Screening Trends Survey and you won’t want to miss it. You’ll hear about what survey participants said on topics such as the latest EEOC guidance in 2012, criminal convictions, candidate criminal record disclosure and more. We look forward to seeing you there!

These days employment background checks have become a full contact sport. With a seemingly endless stream of regulation, legislation and guidance passed at federal and state levels, employers have to be on top of their game.

Be among the first to hear the results and to benchmark our findings with your policies and practices. Join background screening experts Jason Morris, Nick Fishman and Angela Bosworth, J.D. for a free webinar on February 28th at 2pm EST titled, “992 Heads are Better than One: Balancing Applicant Rights & What Employers Need to Know.”

EmployeeScreenIQ polled nearly 1,000 HR professionals to uncover how screening practices within their organizations have evolved in order to incorporate these new regulations into their program while balancing the need to protect their company.

Sign Up for the Webinar Here

I know that this post might look familiar, but there is some updated information you’ll want to check out.  You might recall that the The Consumer Financial Protection Bureau (CFPB) issued new notices this past August which would be required by the Fair Credit Reporting Act effective January 1, 2013.  Well, that’s still the plan, but we were just notified that the forms changed . . . again.  Listed below is our original post with the updated forms.  Again, please remember that these new forms are a requirement beginning on January 1, 2013.

The Consumer Financial Protection Bureau (CFPB) has exercised its regulatory authority by making a change to three notices required by the Fair Credit Reporting Act, effective January 1, 2013. The change directs consumers, furnishers and users of employee background checks to the CFPB instead of the Federal Trade Commission (FTC), and are part of the Dodd–Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111-203, H.R. 4173) that President Barack Obama signed into law on July 21, 2010. While the CFPB does not have supervisory authority over employee background checks, it does have rule making and enforcement powers over the FCRA.

The forms that are being updated are all used in the background screening process, and are required by the FCRA. They include:

• “A SUMMARY OF YOUR RIGHTS UNDER THE FCRA”
• “NOTICE TO USERS OF CONSUMER REPORTS: OBLIGATIONS OF USERS UNDER THE FCRA”
• “NOTICE TO FURNISHERS OF INFORMATION: OBLIGATIONS OF FURNISHERS UNDER THE FCRA.”

We’ve also made these forms available on our Resources Page at http://www.employeescreen.com/resources.asp

To comply with the new law, employers and CRA’s will need to stop using the old forms/notices by January 1, 2013.

This is one of the first actions taken by the CFPB to directly impact employment background checks, but we don’t expect it to be the last. The CFPB has been called upon by consumer watchdog groups to make this change and other changes that could impact the screening process.  Look to EmployeeScreenIQ to keep you up-to-date, and contact us with any questions.

Editorial Note: This post is the lead story for our October Issue of BTW.  Check out Angela’s video on the CFPB’s actions and how they affect you.