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Labor & Employment Alert >> New York City Human Rights Law Restricts Credit Checks of Job Applicants and Employees

September 1, 2015

On September 3, 2015, New York City will join several states and localities throughout the country that have implemented laws limiting the use of credit checks in hiring and other employment decisions.

The “Stop Credit Discrimination in Employment Act,” which was passed by the New York City Council in April 2015 and becomes effective this week, prohibits private employers from requesting or using the consumer credit history of job applicants and employees. The New York City Council Member who introduced the legislation noted that it was intended to be “the strongest bill of its type in the country.”

What the Law Covers
The Act amends the New York City Human Rights Law and states that, unless an exception applies, it is an unlawful discriminatory practice for an employer to request or use the consumer credit history of an applicant for employment, or otherwise discriminate against an applicant or employee based on consumer credit history.

“Consumer credit history” includes information related to credit worthiness, credit standing, credit capacity, or payment history. The Act references numerous items that may reflect credit history, including credit accounts, late or missed payments, charged-off debts, items in collection, credit limits, prior credit report inquiries, bankruptcies, judgments and liens.

The Act provides exceptions for a limited number of jobs:

  • Non-clerical positions involving regular access to trade secrets. “Trade secrets” is defined narrowly and does not include general proprietary company information such as handbooks and policies. The term “regular access to trade secrets” does not include access to or the use of client, customer, or mailing lists.
  • Positions in which the individual will have signatory authority over third party funds or assets valued at $10,000 or more.
  • Positions involving fiduciary responsibility to the employer with the authority to enter financial agreements valued at $10,000 or more on behalf of the employer.
  • Positions involving duties that regularly allow the employee to modify digital security systems to prevent the unauthorized use of the employer’s or client’s networks or databases.

The Act also does not apply to employers that are required by state or federal law or regulation (or by a “self-regulatory organization” as defined in the Securities Exchange Act of 1934), to use an individual’s consumer credit history for employment purposes.

Unlike similar laws that have been passed in other states and localities, this Act does not contain sweeping exemptions for positions in the financial industry, for managerial positions, or for positions involving regular access to confidential information.

The Bottom Line

Employers that require job applicants in New York City to undergo background checks should assess if their background checks include credit history or could result in the retrieval of background information related to credit history. In addition, companies that regularly conduct credit checks are advised to consult with counsel and to review if any credit check policy or practice may need to be modified or discontinued for certain positions.


Labor & Employment