On April 16, 2015, the New York City Council passed legislation (Int. No. 261-A) prohibiting employers from discriminating against employees and job applicants based on their credit histories. The bill was signed into law by Mayor Bill de Blasio on May 7, 2015, and now includes applicants and employees with poor credit on the list of protected classes under the New York City Human Rights Law. The bill will take effect on September 4, 2015.

Specifically, New York City Administrative Code §8-107 has been amended to make the request for or use of information contained in the consumer credit history of an applicant for employment purposes an unlawful discriminatory practice. The law also makes it unlawful to retaliate or discriminate against an applicant or employee with regard to hiring, termination, promotion, demotion, discipline, compensation or the terms of employment based on that consumer credit history.

The law further defines consumer credit history to include credit reports, credit scores, prior bankruptcies, judgments, or liens among other factors that can no longer be considered in making employment decisions.

The law does allow for a number of specific exemptions for the following:

  • Positions requiring security clearance under federal or state law
  • Positions with signatory authority over third-party funds or assets valued at $10,000 or more
  • Positions with authority to enter into financial agreements valued at $10,000 or more on behalf of the employer
  • Positions with regular duties allowing an employee to modify digital security systems designed to prevent the unauthorized use of the employer’s or client’s networks or databases
  • Non-clerical positions with regular access to trade secrets or national security/intelligence information
  • Positions for which employers are required to consider credit history for employment purposes under federal law or by a self-regulatory organization (as defined by the Securities Exchange Act of 1934)
  • Various public safety positions (i.e., certain police officers, peace officers or Department of Investigation personnel)
  • Positions requiring bonding under federal, state or city law

This new law also means that employers must change their employment applications, employee handbooks, interview procedures and background procedures generally to comply with the law before it becomes effective in September.

Employers should note that Article 23-A of the New York State Correction Law already prohibits employment discrimination based on criminal convictions unless there is a sufficient nexus between the conviction and the job for which an interested party has applied. A separate bill (Int. 318) has been proposed in the City Council that would further expand such protections in New York City.