HIGHLIGHTS:

  • The Stop Credit Discrimination in Employment Act prohibits employers from requesting or using an individual's consumer credit history in making employment decisions.
  • There are a variety of exceptions that allow employers to request and/or consider an individual's credit history for employment purposes. Several types of specific positions are also exceptions.
  • New York City employers should review their employment documents and policies to ensure the removal of any reference to credit checks for positions that do not meet one of the law's exceptions.

New York City Mayor Bill de Blasio recently signed into law the Stop Credit Discrimination in Employment Act. It amends the New York City Human Rights Law to prohibit employers from requesting or using an individual's consumer credit history in making employment decisions. In passing the law on April 16, 2015, New York City joins a growing list of states and municipalities that have enacted similar laws, including California, Connecticut, Hawaii, Maryland, Nevada, Washington and Chicago. The law will take effect on Sept. 3, 2015.

Requirements of the Law

The new law makes it

... an unlawful discriminatory practice for an [New York City] employer, labor organization, employment agency, or agent thereof to request or to use for employment purposes the consumer credit history of an applicant for employment or employee, or otherwise discriminate against an applicant or employee with regard to hiring, compensation, or the terms, conditions or privileges of employment based on the consumer credit history of the applicant or employee.

"Consumer credit history" is defined as any information bearing on an individual's credit worthiness, credit standing, or credit capacity, including but not limited to an individual's credit score, credit account and other consumer account balances, and payment history.

Exceptions for Reviewing Credit Histories

There are a variety of exceptions in the new law that allow employers to request and/or consider an individual's credit history for employment purposes. For example, the law does not apply to employers required by state or federal law to use an individual's consumer credit history for employment purposes (e.g., Financial Industry Regulatory Authority (FINRA)). The law also does not apply to individuals applying for or occupying the following positions:

  • police or peace officers, or those in a position with a law enforcement or investigative function
  • non-clerical workers who have regular access to intelligence information, national security information, or trade secrets
  • positions where the regular duties permit the employee to modify digital security systems to prevent the unauthorized use of an employer's or client's networks or databases
  • positions that require background investigation by the "department of investigation for certain public trust positions"
  • positions that require an employee to be bonded under city, state, or federal law
  • positions that require an employee to possess a security clearance under federal law or the law of any state
  • positions that have signatory authority over third-party funds or assets valued at $10,000 or more, or involve a fiduciary responsibility to the employer with authority to enter financial agreements valued at $10,000 or more on behalf of the employer

Employers are also able to request or receive consumer credit history information through a lawful subpoena, court order, or law enforcement investigation.

Remedies for Individuals with Valid Complaints

Individuals will be able to file a complaint, as a private right of action, with the New York City Commission on Human Rights or file an action directly in state court. Successful plaintiffs can recover the full range of damages under the New York City Human Rights Law that includes back pay, compensatory and punitive damages, attorneys' fees and costs, emotional distress, reinstatement, and/or other equitable relief.

The Next Steps for New York City Employers

New York City employers should review their employment documents and policies, including application forms, offer letters and handbooks to ensure the removal of any reference to credit checks for positions that do not meet one of the law's exceptions.

Holland & Knight lawyers can assist New York City employers – including those employers that are regional, national or international – to make certain that they comply with this new law.