New York City Bans Employers From Using Credit Checks To Screen Job Applicants

Under a bill signed into law by Mayor Bill de Blasio on Wednesday, May 6, 2015, New York City businesses will be banned from using credit reports, bankruptcies and liens to disqualify applicants from employment. The Stop Credit Discrimination in Employment Act, which was sponsored by Councilman Brad Lander (D-Brooklyn), takes effect in 120 days and will amend the New York City Human Rights Law (NYCHRL).  Only three New York City Council members voted against the measure.  Advocates of the law pressed politicians for the prohibition arguing that law-abiding applicants cannot get jobs after being saddled with student loans or medical bills that have ruined their credit.  New York City will now join California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington, as well as the city of Chicago in limiting the use of credit checks for employment purposes. Under the new law, it will be an unlawful discriminatory practice for a New York City employer, labor organization, or employment agency to request or use for hiring or other employment purposes the consumer credit history of an employee or applicant. “Consumer credit history” includes an individual’s credit worthiness, credit standing, credit capacity, or payment history as indicated by a consumer credit report, credit score, or information an employer obtains directly from the individual. The new law, however, provides for several exemptions: law enforcement and other professions involving a high level of public trust or access to sensitive information, and for employers who conduct credit history checks pursuant to state and federal laws or regulations. For these positions, employers must still comply with the notice and consent requirements of the federal Fair Credit Reporting Act (FCRA) as well as any equivalent state or local laws.  FCRA requires notice to the applicant, providing a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act,” and obtaining written authorization/consent from the applicant or employee. Given the amendment to the NYCHRL, the New York City Commission on Human Rights (“NYCCHR”) will be the law’s enforcement authority.  Individuals will be able to file a complaint with the NYCCHR or file an action directly in state court. Successful plaintiffs will be able to recover back pay, compensatory and punitive damages, attorneys’ fees and costs, reinstatement and/or other equitable relief. Employers’ Takeaway

• As of September 3, 2015, subject to limited exceptions, New York City employers may not utilize credit reports, bankruptcies and liens to disqualify applicants from employment.

• Employers who use credit checks should carefully review the limited exceptions in the law to determine which positions, if any, can still be subject to credit checks.

• Employers must review their application forms, offer letters, and handbooks with counsel to ensure the removal of any reference to credit checks for positions that do not meet one of the law’s limited exceptions.

For more information regarding the new law and to learn how Genova Burns can assist your company to comply with the new law by September 3, 2015, please contact John C. Petrella, Director of the firm's Employment Litigation Practice Group at jpetrella@genovaburns.com or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.