This week New York City Mayor Bill de Blasio will hold on hearing on New York City’s Proposed Int. No. 261-A, which would ban the use of consumer credit history, making its use potentially an unlawful discriminatory practice. Certain exceptions apply to the general prohibition on an employer, or their agent’s, request or use for employment purposes of consumer credit history of a job applicant or employee.  The bill’s definition of “consumer credit history” limits the ban or prohibition to information found in consumer credit reports, a credit score or information provided by the individual.

Impact on Background Screening Companies

Background screening companies should pay special attention to the fact that the proposed legislation will not be limited to employers, but specifically applies the prohibition to “agents” who request consumer credit history of an applicant for employment or an employee.

Exceptions to the General Ban on the Use of Credit History

Certain exceptions to the prohibition on requesting or using credit history for employment include:

  • When an employer, or agent, is required by state or federal law or regulations or by a self-regulatory organization to use an individual’s consumer credit history for employment purposes; or
  • For persons applying for positions or employed in: law enforcement, positions of public trust, where bonding or a security clearance is required, positions involving fiduciary responsibilities and others.

There appears to be ambiguity with respect to how broad an employer can interpret the employer exception in proposed Section 8-107, subdivision 24, which states that the general prohibition on use of consumer credit history for employment purposes does not apply when “(1) an employer, or agent thereof, that is required by state or federal law or regulations or by a self-regulatory organization as defined in section 3(a)(26) of the securities exchange act of 1934, as amended to use an individual’s consumer credit history for employment;”.  This author’s view is that this exception to the general prohibition on credit history is only for those individual’s for whom such is required by state or federal or law.  Meaning it is individual specific and not meant to broadly exempt an employer if they have even one job applicant or employee for whom state or federal law requires a background check which includes credit history.

Upcoming Hearing

On May 6, the mayor (who is expected to sign the legislation) will hold a hearing on the proposed legislation.  Click here  and then on “Legislation Details” for notice of the hearing.  No further information regarding the hearing has been provided.  Therefore, to be clear, New York City’s ban on the use of consumer credit history for employment screening purposes is not yet in effect.

Law Citation and Effective Date

The title of the bill is the “Stop Credit Discrimination in Employment Act”, and if signed by the mayor, the law would take effect 120 days after enactment. It would amend New York City’s Human Rights Law, sections 8-102 and 8-107 of the administrative code of the city of New York.