Last week, New York City Mayor Bill DeBlasio signed into law a bill that expands the New York City Human Rights Law and 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. New York City has joined Chicago and 10 states in limiting the use of credit checks by employers. While the New York City law contains a number of exemptions, the exemptions are narrower than those in most of the other jurisdictions, most of which exempt financial institutions and banks entirely. In contrast, the New York City law provides exemptions for current and prospective employees:
- employers required to have security clearances under federal or state law or by a national securities exchange, registered securities association or registered clearing agency;
- working as police or peace officers;
- working in a position in which a high degree of public trust has been reposed and that is subject to background investigation by the department of investigation;
- working in a position in which an employee is required by law to be bonded or possess security clearance under City, state or federal law;
- working in a non-clerical position having regular access to trade secrets, intelligence information or national security information;
- working in a position having signatory authority over third-party assets worth $10,000 or more, or that involves a fiduciary duty to the employer with the authority to enter financial agreements of $10,000 or more on behalf of the employer; or
- working in a position with regular duties that allow the employee to modify digital security systems established to prevent the unauthorized use of the employer’s or client’s networks or databases.
Importantly, the law has its own definition for “trade secrets” which excludes general proprietary company information such as handbooks and policies as well as the use of client, customer or mailing lists.
Violations can result in civil penalties of up to $125,000 ($250,000 for willful violations), and aggrieved employees and prospective employees can sue to recover front pay, back pay, hiring/reinstatement, compensatory and punitive damages and attorneys’ fees.
The new law goes into effect on September 3, 2015. Employers with employees in New York City should review their credit check policy to ensure they are in compliance with the new law.