NYC to Prohibit Employers From Using Credit Checks to Screen Applicants

New York City Mayor Bill de Blasio recently signed into law the Stop Credit Discrimination in Employment Act. It amends the city’s Human Rights Law to prohibit most New York City employers from using or requesting an applicant’s consumer credit history, and prevents them from discriminating against an applicant or employee based on their credit history.

The new law was signed by de Blasio on May 6 and is scheduled to go into effect on Sept. 3, 120 days after being signed by the mayor.

The mayor’s office said using credit checks during the hiring process to screen applicants disproportionately affects low-income applicants and applicants of color.

“Every New Yorker applying for a job deserves a fair shot — and we are committed to protecting the rights of our workers and making sure that every New Yorker has the opportunity to succeed. This bill will remove a barrier to employment and ensure that people are judged on their merits and ability, rather than unrelated factors,” said de Blasio.

New York City Council Member Brad Lander, who sponsored the legislation, said there is no link that can be shown between credit history and job performance and that New York City law now reflects that fact. “After this bill passed the Council, I heard from a recently laid-off single mom, worried about finding a new job because of her daughter’s college loans on her credit report. She wrote that this law gives her ‘a new lease on life,'” Lander said.

Carmelyn Malalis, commissioner and chair of the New York City Commission on Human Rights, said poor credit scores can be triggered by a host of reasons — a lost job, a medical crisis, overwhelming student debt, or identity theft.

“Many New Yorkers know what it’s like to face a personal crisis that forces them to take on debt. The use of credit history to determine job worthiness denies already vulnerable New Yorkers opportunities to gain employment and earn a living for themselves and their families,” said Malalis. “This bill is an important step in ending this practice. Our law enforcement staff will be vigilant in enforcing this law as ‎our Community Relations Bureau takes proactive measures to educate individuals on their rights and employers on their obligations.”

Exceptions

The mayor’s office noted the law has several exceptions, including for law enforcement and other professions involving a high level of public trust or access to sensitive information, and for employers who conduct credit history checks pursuant to state and federal laws or regulations.

Bennett Pine, a shareholder in law firm Anderson Kill’s New York and Newark offices and chair of the firm’s employment and labor law group, explained the ban on credit checks does not apply to:

• police, law enforcement, public safety and other appointed positions subject to background investigations by the NYC Department of Investigation;
• bonded and financial services positions;
• non-clerical jobs providing access to trade secret or national security/intelligence information;
• jobs with signatory or fiduciary authority over funds valued at $10,000 or more;
• jobs where security clearance is required by any federal or state law; and
• positions allowing the employee access to modify digital security systems designed to prevent the unauthorized use of networks or databases.

Pine said the new law adds New York City to a list that includes 10 states (California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington) and the city of Chicago, all of which currently ban the use of credit checks of job applicants. Chicago, and several of the states, allow credit checks to be performed for any job involving money handling.

Pine advised that New York City employers should look carefully at the scope of their credit and background check protocols to ensure that they are in compliance with the Stop Credit in Discrimination in Employment Act and/or fall within any of the new law’s exclusions, prior to the law’s effective date of Sept. 3.

When asked if certain exceptions could apply for insurance sector jobs, Pine said it would depend on the functions of the position. “For example, are they bonded or actually working in a financial services position? Do they have actual signatory or fiduciary authority over $10,000 in funds?” said Pine. He said positions such as clerical, maintenance, sales or support jobs might not reach that threshold for the exceptions.

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