NYC Twelfth Jurisdiction Prohibits Credit Checks for Employment

Prohibits Credit Checks

It’s Affirmed, New York City Prohibits Credit Checks for Employment Purposes

The New York City council passed a bill in April of 2015 that now prohibits credit checks for employment purposes when the employer has four or more employees. The NYC Coalition to Stop Credit Checks in Employment, a coalition of nearly 80 community, labor, civil rights, student, immigrant and legal services organizations, approves of and celebrates a clear victory in the implementation of the “Stop Credit Discrimination in Employment Act.” NYC’s new law, touted as the strongest of its kind in the country, amends the local Human Rights Law making it illegal for employers to ask about or in any way use consumer credit information in making hiring, promotion, demotion, compensation or any other employment decisions.

Potential Exception

Some exceptions to the law include the hiring of law enforcement officers and various other public officials, as well as any position that would require access to funds of $10,000 or more. Jurisdictions that already have banned pre-employment credit checks include California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, Washington, and the city of Chicago. Each state has their own set of exceptions to the law. Even if employers are hiring outside of the above jurisdictions, virtually all employers are subject to certain legal boundaries when it comes to using credit checks to make a hiring decision. Certainly moral boundaries should be an area of concern for any employer.

Prohibits Credit Check Infographic

Credit Checks for Employment

FCRA

If credit checks are used in a hiring decision, adherence to the Fair Credit Reporting Act (FCRA) is crucial:

  • Employers must inform the applicant in question that a credit check will be conducted on them, and then get their permission in writing
  • Before employers may make an adverse action against an individual based solely on a credit check such as eliminate them as a job candidate or terminate active employment, the employer must provide a Pre-Adverse Action letter that consists of a copy of their credit report and a written summary of their rights under the FCRA.
  • After an employer has taken adverse action, they must then provide to the consumer an Adverse Action Notice supplying the contact information of the agency that provided their credit report in case it contains inaccurate information that needs to be disputed.
  • Employers must keep the credit check results confidential and can’t store any information about it in an employee’s personnel file.

The NYC Commission on Human Rights will be hosting “Know Your Rights” training’s for workers, as well as “Know Your Obligations” training’s for employers, throughout the city. For more information, visit the Commission’s website at www.nyc.gov/cchr. For more information on pre-employment credit checks and how to properly implement them in your pre-employment procedures while remaining compliant, please contact us.