Pre-Employment Credit Checks Are Now Prohibited in NYC

New York City recently joined the growing list of jurisdictions that prohibit employers from conducting pre-employment credit checks.

On April 16, 2015, the NYC City Council passed the law that will prohibit pre-employment credit checks, “Stop Credit Discrimination in Employment Act”. The new law will become effective 120 days after being signed into law by Mayor Bill de Blasio.

The Stop Credit Discrimination in Employment Act

The anti pre-employment credit checks law, which applies to businesses with four or more employees, would amend the New York City’s Human Rights Law to make it an unlawful discriminatory practice for an employer to use an individual’s consumer credit history in making employment decisions. As with other violations of the law, workers would be able to pursue a private cause of action.

The broad employment law defines “consumer credit history” as “information bearing on an individual’s credit worthiness, credit standing, or credit capacity, including, but not limited to, an individual’s credit score, credit account and other consumer account balances, and payment history.” Information about prior bankruptcies, judgments, or liens and details regarding the number of credit accounts, late or missed payments, charged-off debts, items in collections, credit limit or prior credit report inquiries is also off limits.

In addition to banning the use of consumer credit histories in the hiring process, the law also makes it illegal to consider such information when making decisions regarding “compensation, or the terms, conditions or privileges of employment.”

The NYC employment law does include several notable exceptions from pre-employment credit checks , which were added to the law in its final stages. For instance, it does not apply to employers required by state or federal law or regulation, or by a self-regulatory organization, to use consumer credit history for employment purposes.

Exemptions

In addition, the following are also exempted from pre-employment credit checks :

• Positions in public safety and law enforcement;
• Positions in which employees must be bonded under city, state, or federal law;
• Positions requiring employees to posses security clearance under federal or state law;
• Non-clerical positions with regular access to trade secrets, intelligence or national security information;
• Positions with signatory authority over third party funds or assets valued at or involving fiduciary responsibility to the employer of $10,000 or more; and finally,
• Positions with regular job duties authorizing the modification of digital security systems protecting the employer or client’s network or databases.

The Stop Credit Discrimination in Employment Act reflects the growing trend of restricting the use of consumer credit checks to screen potential job candidates. California, Maryland, Connecticut, Hawaii, Illinois, Washington, Oregon, Vermont, Colorado and Nevada already have similar measures in place. Accordingly, it is imperative for employers to review their policies and procedures to maintain compliance in this rapidly evolving legal landscape.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Jorge R. de Armas or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.