New York City has joined an increasing number of states and cities, including California and Chicago, in enacting laws intended to prevent employers from using the consumer credit history of an employee or applicant when making employment decisions. The Stop Credit Discrimination in Employment Act (the Act or SCDEA), which went into effect on September 3, 2015, amends the New York City Human Rights Law (NYCHRL), making it illegal for most employers to request or use an employee's or applicant's credit history for employment purposes, unless one of eight exceptions applies. The NYC Commission on Human Rights issued a Legal Enforcement Guidance on the Stop Credit Discrimination in Employment Act on September 30, 2015.

Prohibited Acts

The Act generally prohibits an employer with four or more employees from requesting or using an employee's consumer credit history when making decisions related to hiring, compensation, and other terms and conditions of employment. Consumer credit history, as defined by the SCDEA, is "an individual's credit worthiness, credit standing, credit capacity, or payment history, as indicated by: (a) a consumer credit report; (b) credit score; or (c) information an employer obtains directly from the individual regarding matters such as the individual's number of credit accounts, late or missed payments, charged-off debts, items in collections, credit limit, prior credit report inquiries, or bankruptcies, judgments, or liens." Notably, the term "consumer reporting agency" is defined more broadly than under either the federal or state Fair Credit Reporting Acts. It is an unlawful discriminatory practice simply to request or use consumer credit history, even if the practice does not lead to any adverse employment action. Whether there was a subsequent adverse employment action is relevant for determining damages or penalties, but is irrelevant for determining liability.


The Act recognizes a number of exemptions pursuant to which an employer may request information about an applicant's or employee's consumer credit history, including employers required by state or federal law or regulation to use an individual's consumer credit history for employment purposes, positions for which bonding is required by law, as well as non-clerical positions having regular access to trade secrets, and positions involving responsibility for funds or assets worth $10,000 or more. Employers relying on these exemptions must inform the applicant or employee of the claimed exemption and must keep a record of that exemption in a log for five years. There are, not surprisingly, a number of requirements with which an employer must comply in order to maintain a legally sufficient log.


Civil penalties under the Act may range from $125,000 for inadvertent violations, up to $250,000 for violations that are the result of willful, wanton or malicious conduct. These penalties are in addition to other remedies available to individuals who may bring a claim under the NYCHRL, including, but not limited to, front and back pay, compensation, punitive damages and attorneys' fees.

Next Steps

Given the breadth of the SCDEA, its narrowly defined exemptions and the severe penalties, New York City employers are encouraged to carefully review the policies and procedures they currently have in place with respect to the use of credit history in hiring or other employment decisions.