New York City Mayor Signs Bill Banning Most Employers From Using Credit Checks

May 2015

Last week, Mayor de Blasio signed legislation (NYC Int. 0261-A-2014) that amends the NYC Human Rights Law to make it an unlawful discriminatory practice for employers to request or consider the credit history of a prospective or current employee when making employment decisions. The law goes into effect on September 3, 2015.

As we detailed in our prior alert, New York City's new law defines "credit history" broadly and includes a consumer credit report or credit score, in addition to information directly obtained from the employee or applicant regarding his or her: (1) number of credit accounts, late or missed payments, charge-off debts, items in collections, credit limit, prior credit report inquiries, or (2) bankruptcies, judgments or liens.

The law, however, includes certain exceptions and will not apply to:

  • Employers who are required to consider credit history for employment purposes by state or federal law or regulation or by a self-regulatory organization (as defined by the Securities and Exchange Act of 1934);
  • Some public safety positions (e.g. certain police officers, peace officers, Department of Investigation personnel and other individuals who are subject to a background investigation by the Department);
  • Positions requiring bonding under federal, state or city law (e.g. positions where employee handles cash, securities or other valuables);
  • Positions which require security clearance under federal or state law;
  • Non-clerical positions with regular access to trade secrets, intelligence information or national security information;
  • Positions with (i) signatory authority over third party funds or assets valued at $10,000 or more; or (ii) authority to enter financial agreements valued at $10,000 or more on behalf of the employer;
  • Positions with regular duties that allow the employee to modify digital security systems established to prevent the unauthorized use of the networks or databases of the employer or an employer's clients.

New York City now joins several states, including California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont and Washington, in banning the use of credit history for employment purposes.

New York City employers should begin reviewing background check policies and procedures to ensure compliance with this new law.

For more information on this issue or other employment matters, please contact:

Carol M. Goodman at [email protected] or +1 212 592 1465.

© 2015 Herrick, Feinstein LLP. This alert is published by Herrick, Feinstein LLP for information purposes only. Nothing contained herein is intended to serve as legal advice or counsel or as an opinion of the firm.