As we covered in a prior blogpost in May 2015, New York City Mayor Bill de Blasio signed into law an expansion of the New York City Human Rights Law impacting how employers may use credit checks.  The “Stop Credit Discrimination in Employment Act,” which became effective on September 3, 2015 (the “Act”), makes it an unlawful discriminatory practice for employers to request or use consumer credit history for employment purposes or otherwise discriminate against an applicant or employee based on their consumer credit history.  The New York City Commission on Human Rights (the “Commission”) recently released legal enforcement guidance on the Act (the “Guidance”).

The Commission first and foremost clarified its intent of making the Act “the strongest bill of its type in the country prohibiting discriminatory employment credit checks.”  The Act generally aims to prohibit employers from using an applicant or employees’ consumer credit history when making employment decisions, as the Commission contends such practice “has a disproportionately negative effect on unemployed people, low income communities, communities of color, women, domestic violence survivors, families with children, divorced individuals, and those with student loans and/or medical bills.”

The Commission’s Guidance provides a broad definition of “consumer credit history” and clarifies actions that constitute “unlawful discrimination practices,” even if such actions do not lead to a failure to hire or a termination decision:

  • Requesting consumer credit history from job applicants or potential or current employees, either orally or in writing;
  • Requesting or obtaining consumer credit history of a job applicant or potential or current employee from a consumer reporting agency; and
  • Using consumer credit history in an employment decision or when considering an employment action.

Most notably, the Guidance clarifies some of the Act’s nebulous exemptions to the above-listed prohibitions. The employer must prove the exemption is applicable when defending against liability by a preponderance of the evidence.  Among others, the following positions are exempt from the Act: mortgage loan originators; police officers; certain positions subject to a Department of Investigation background investigation; positions legally requiring bonding such as bonded carriers for U.S. Customs, harbor pilots, ticket sellers & resellers, auctioneers, and tow truck drivers; positions legally requiring security clearance; non-clerical positions with access to certain trade secrets; positions responsible for at least $10,000 in funds or assets; and executive-level positions involving digital security systems.

The Commission also cautions employers that exemptions will be narrowly construed.  The employer must inform applicants and employees of any claimed exemption.  Employers should keep a detailed record of their claimed exemptions for five (5) years from the date an exemption is used.  The Commission’s Guidance closes with a warning that it will pursue civil penalties up to $125,000 for violations of the Act, and up to $250,000 for willful, wanton or malicious conduct resulting in Act violations.

In sum, the Guidance specifies which positions are exempt from the Act’s credit check prohibitions and suggests the Commission will aggressively pursue possible violations of the Act. Employers should therefore consider reviewing the Guidance in full before using an applicant or employee’s credit history information, even if for an exempt position.