Use of Credit Checks In Employment Decisions In New York City May Be Deemed Discriminatory

On April 16, 2015, the New York City Council passed the Stop Discrimination in Employment Act (Int. 0261-2014). The Act amends the New York City Human Rights Law to prohibit employers from making employment decisions, such as hiring, compensation or promotion, based on an employee or applicant’s consumer credit history. The Act defines consumer credit history broadly to include information related to credit-worthiness, credit standing, credit capacity, or payment history, whether obtained from the individual or through the use of a credit check.

The Act carves out exceptions for a limited number of positions where employers may continue to use consumer credit history in making employment decisions. These include individuals applying for positions as, or employed:

1. as police and peace officers or in a position with a law enforcement or investigative function at the department of investigation;
2. in positions in which an employee is required to be bonded under the City, state or federal law;
4. in positions where security clearances must be obtained under federal law or the law of any state;
5. in non-clerical positions with regular access to trade secrets, intelligence information or national security information;
6. in positions that allow an employee to modify digital security systems established to prevent unauthorized use of the employer’s or client’s networks or databases; and
7. in positions that provide for public trust, such as high level City employees who are already subject to background checks and Conflict of Interest Board financial disclosures. The Act also permits credit checks when hiring for positions having signatory authority over third party funds or assets valued at $10,000 or more or that involve fiduciary duties to the employer with the ability to enter financial agreements valued at $10,000 or more.

The purpose of the Act is to provide deserving job applicants with poor credit history the ability to compete for jobs based on skills and qualification, without fear that they will be discriminated against based on their credit history. Employers in New York City should review their background check policies to determine if changes to their policies and procedures may be necessary. Where employers continue to perform background checks on certain individuals they should be aware of the disclosure and authorization requirements under the New York State and Federal Fair Credit Reports Acts. The new law is set to go into effect September 3, 2015.

If you have any additional questions about Employment Decisions please contact Lauren Levine,  Madelin Zwerling or the GW Attorney with whom you regularly work.

~Submitted by L Levine

Categories: Employment Law