New York City Prohibits Use of Credit Reports for Employment Purposes

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Apr 20, 2015

Last week, the New York City Council passed a bill that makes it unlawful for employers to request or use a job applicant’s credit history for employment purposes as part of their background screening practices.

Intro Bill 261-A amends the 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. The bill is expected to be signed by Mayor Bill DeBlasio and will be effective 120 days following approval.

The City Council created a limited set of exemptions for sensitive positions (see below), however it’s worth noting that these exemptions are much more narrow than those provided in similar state laws.

Bill Exemptions:

  • An employer, or agent thereof, that is required by state or federal law or regulations or by a self-regulatory organization as defined in section 3(a)(26) of the securities exchange act of 1934, as amended to use an individual’s consumer credit history for employment purposes;
  • Persons applying for positions as or employed:
    • (A) As police officers or peace officers, as those terms are defined in subdivisions thirty-three and thirty-four of section 1.20 of the criminal procedure law, respectively, or in a position with a law enforcement or investigative function at the department of investigation;
    • (B) In a position that is subject to background investigation by the department of investigation, provided, however, that the appointing agency may not use consumer credit
    • (C) In a position in which an employee is required to be bonded under City, state or federal law;
    • (D) In a position in which an employee is required to possess security clearance under federal law or the law of any state;
    • (E) In a non-clerical position having regular access to trade secrets, intelligence information or national security information;
    • (F) In a position: (i) having signatory authority over third-party funds or assets valued at $10,000 or more; or (ii) that involves a fiduciary responsibility to the employer with the authority to enter financial agreements valued at $10,000 or more on behalf of the employer.
    • (G) In a position with regular duties that allow the employee to modify digital security systems established to prevent the unauthorized use of the employer’s or client’s networks or databases.

10 states bar use of credit checks

New York City joins 10 states which currently prohibit the use of employment credit reports except in limited circumstances: California, Colorado, Connecticut, Illinois, Hawaii, Maryland, Nevada, Oregon, Vermont and Washington.

Employers in New York City that conduct employment credit reports are encouraged to review their policies and practices to determine if they qualify for the aforementioned exemptions.

This was originally published on the EmployeeScreen IQ blog