On April 16, 2015, the New York City Council passed a bill that will amend the New York City Human Rights Law (NYCHRL) to prohibit New York City employers from requesting or using credit checks in employment decisions except under limited circumstances. Bill 261-2014 is expected to be signed into law by New York City Mayor Bill de Blasio and will go into effect 120 days later.

Summary of the bill

Subject to the exceptions listed below, it will be an unlawful discriminatory practice for an 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.

Exceptions

Employers will be permitted to request and use consumer credit history for employment purposes under the following circumstances only:

  • when required by state or federal law or regulations;
  • when required by any national securities exchange, registered securities association, or registered clearing agency;
  • for employment as a police or peace officer, or employment as a public official in an appointed position with a high degree of public trust;
  • for jobs in which an employee is required to be bonded under city, state, or federal law;
  • for jobs in which an employee is required to have security clearance under federal or state law;
  • for non-clerical positions with regular access to trade secrets, intelligence information, or national security information. For purposes of this exception, “trade secrets” does not include “general proprietary company information,” such as handbooks or policies, or access to or the use of client, customer, or mailing lists;
  • for positions with signatory authority over third-party funds or assets worth US$10,000 or more, or positions involving a fiduciary responsibility to the employer with the authority to enter financial agreements of US$10,000 or more on behalf of the employer; or
  • for positions with regular duties allowing the employee to modify digital security systems that are established to prevent the unauthorized use of the employer’s or client’s networks or databases.

Prior to conducting a credit check on an applicant or employee in an employment position falling within one of these exceptions, an employer must continue to comply with the notice and consent requirements of the federal Fair Credit Reporting Act (FCRA) and any equivalent state or local laws. The FCRA procedures, for example, require (a) providing notice to the applicant or employee that the employer will seek a credit report; (b) supplying a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act;” and (c) obtaining written authorization/consent from the applicant or employee.

Enforcement

Because the bill is an amendment to the NYCHRL, the existing rights and remedies for employment discrimination under the NYCHRL will be available for violations of the new law. As such, individuals will be able to file a complaint with the New York City Commission on Human Rights or file an action directly in court. Further, successful plaintiffs will be able to recover remedies such as back pay, compensatory and punitive damages, attorneys’ fees and costs, and reinstatement or other equitable relief.

Employer considerations

When the law goes into effect, New York City will join several other localities that have passed laws limiting the use of credit checks for employment purposes—including California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington, as well as the city of Chicago. However, New York City’s law will be among the most restrictive laws to date, due to the narrowness of its exceptions. New York City employers should consult with counsel to determine whether this law will have an effect on their hiring and employment policies. Specifically, employers who use credit checks should carefully review the exceptions in the law to determine which positions, if any, will still be subject to such checks. Further, employers should review employment application forms, offer letters, and handbooks and remove references to credit checks for positions that do not meet one of the exceptions.