First up this week, Colorado passed an expansive law that
prevents the use of a job applicant’s credit history in hiring or employment
decisions. The law is broad, basically applying
to every employer outside the law enforcement profession, and almost every
employee and job applicant is covered by the law. Consumer credit information is defined
widely, and the law applies to most credit score information and credit history
data. One of the most important
exceptions is that the law allows the use of credit information if it is “substantially
related to the employee’s current or potential job,” and it also has an
exception for financial institutions and banks.
The “substantially related” exception allows the use of credit
information where the job is a managerial position, one with access to consumer
information, one where the employee can enter into contracts, or where the
employee has fiduciary responsibilities.
Where the employer relies on credit information to take adverse action
against the employee or applicant, it has to release that information to him or
her along with an explanation. In
general, the law continues a nationwide trend of limiting the use of credit
information in hiring decisions, a trend that has caused the EEOC to consider
whether guidance is needed on whether such checks may violate Title VII.
Moving in the opposite direction, this week the House of
Representatives voted down an attempted amendment to a cyber intelligence
sharing bill that would have prevented an employer from asking for its
employees’ social media passwords.
However, the Social Networking Online Protection Act, a bill that would
accomplish essentially the same thing as the defeated amendment, is pending in the
House, though previous versions have sat dormant.
Finally, representatives from California introduced a bill
that would strip states and cities of their right o issue tax-exempt bonds
unless they disclosed the costs of their pension plans and whether the costs are
sustainable. The measure seeks to prevent more municipal
bankruptcies, and steps into a debate about whether bond debts or pension debts
have legal priority. The bill’s sponsors
think that disclosure to the public will better prevent financial mismanagement
and limit public-sector expenditures on “wasteful” works projects. Public employee’s unions vehemently protested
a 2011 version of the bill, stating that its true goal was to make public
pension fund costs look exorbitant in an attempt to drive down public-sector
benefits. While the new bill would not
put a cap on the municipal bond tax exemption (a popular proposal around
Washington these days), it would force governments to utilize more accurate
accounting principles in order to give a true estimate of their obligations,
and hopefully those estimates would lead to more realistic local spending and
more limited issuance of debt.