Robinson Brog Leinwand Greene Genovese & Gluck, P.C. - New York City Business Litigation Attorneys

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New York City to Ban Employment-Related Credit Checks

by Felicia Ennis

On April 16, 2015, by a vote of 47-3, the New York City Council approved a bill (Int. 0261-2014)(the “Bill”), to prohibit most employers from inquiring into or considering a prospective or current employee’s credit history when making employment decisions.  The Bill, which Mayor Bill de Blasio is expected to sign, will amend the NYC Human Rights Law (§§ 8-102, 8-107).  The law will be effective 120 days following enactment.

The Bill defines "consumer credit history" broadly to include not only information obtained directly from an individual’s consumer credit report of credit score, but also information obtained directly from the individual, including such information as late or missed payments, credit limits, or  bankruptcies, judgments or liens.

The Bill also broadly defines a consumer credit report to include “any written or other communication of any information by a consumer reporting agency that bears on a consumer's creditworthiness, credit standing, credit capacity or credit history.”

If enacted, New York City will join a growing number of states and municipalities that have enacted similar legislation to prohibit an employer’s use of an individual’s credit history in making employment decisions such as hiring, promotions and terminations.  

Although the Bill contains a number of exemptions, it will be one of the most restrictive laws to date if enacted.  The Bill shall not apply to the following:

  • Employers who are required by state or federal law or regulations 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;
  • Certain law enforcement and investigative positions such as police officers or  peace officer;
  • Positions that are subject to background investigation by the department of investigation, provided that the appointing agency may not use consumer credit history information for employment purposes unless the position is an appointed position in which a high degree of public trust (as defined by commission on human rights rules) has been placed;
  • Jobs requiring an employee to be bonded under city, state, or federal law;
  • Positions requiring an employee to possess a security clearance under federal law or the law of any state;
  • Non-clerical positions that have regular access to trade secrets, intelligence information, or national security information;
  • Positions (1) having signatory authority over third-party funds or assets valued at $10,000 or more, or (2) involving a fiduciary responsibility to the employer with authority to enter financial agreements valued at $10,000 or more on behalf of the employer;
  • Jobs having regular duties that permit the employee to modify digital security systems established to prevent the unauthorized use of the employer’s or client’s networks or databases.

Employers would not be prohibited from requesting or receiving consumer credit history information via a lawful subpoena, court order, or law enforcement investigation.

Mayor Bill de Blasio is expected to sign the bill, and the law will be effective 120 days following enactment.

Private Right of Action for Employees

With regard to enforcement, the Bill permits employees to pursue a private right of action and seek the same broad remedies as any other claims asserted under the NYC Human Rights Law. It will take effect 120 days after it is signed by Mayor Bill de Blasio.

Recommendations

Employers in New York City that use credit reports or related information should evaluate and reassess their practices and procedures with respect to employment-related credit checks in anticipation of the law taking effect.

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