New York City Passes Expansive Ban on Credit Checks

Posted: April 24, 2015

On April 16, the New York City Council passed the “Stop Credit Discrimination in Employment Act.” The bill is currently awaiting Mayor de Blasio’s signature. Once signed, the bill will become effective within 120 days. Under the Act, consumer credit history is defined as follows:

• [I]ndividual’s credit worthiness, credit standing, credit capacity, or payment history, as indicated by: (a) a consumer credit report; (b) credit score; or (c) information an employer obtains directly from the individual regarding (1) details about credit accounts, including the individual’s number of credit accounts, late or missed payments, charged-off debts, items in collections, credit limit, prior credit report inquiries, or (2) bankruptcies, judgments or liens. A consumer credit report shall 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.

Employers are prohibited from requesting or using any consumer credit history for employment purposes. Further, employers may not discriminate against any individual in terms of hiring, compensation, or the terms, conditions or privileges of employment based on consumer credit history. There are several exceptions under the Act, such as police or peace officers and employers required by state or federal law or regulation to consider consumer credit information. Other exceptions include (but are not limited to) positions that have access to trade secrets, intelligence information or national security information, positions with signatory authority over third party funds or assets valued at over $10,000 and positions where an individual is required to possess a security clearance. Employers may also request and receive consumer credit information pursuant to a subpoena, court order or law enforcement investigation. In addition to New York City, California, Chicago, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington all possess laws that in some way prohibit employers from using credit information in employment decisions. Impacted employers should consult with qualified legal counsel to determine the impact of this new legislation to their hiring practices.