NYC Credit Check Law for Hiring

Published May 11, 2015

NYC Credit Check Law for Hiring

Employers in New York City will not be able to perform consumer credit background checks on job applicants.

New York City amended its Human Rights Law to make it illegal for employers or third-party agencies to request a credit check or to use information from a credit check to assess job applicants. The amendment (0261-2014) takes effect Sept. 3, 2015.

Mayor Bill de Blasio said the amendment will give NYC job applicants “a fair shot.”

“This bill will remove a barrier to employment and ensure that people are judged on their merits and ability, rather than unrelated factors,” he said.

Which Parts of a NYC Applicant’s Credit History Are Off Limits?

The new amendment makes it illegal for employers to request information about applicants’ credit, including:

  • Credit score
  • Credit limit
  • Payment history
  • Number of credit accounts
  • Late or missed payments
  • Charged-off debts
  • Items in collections
  • Prior credit report inquiries
  • Bankruptcies, judgments or liens

Which Jobs Are Excluded from the NYC Credit Check Ban?

Certain types of positions are excluded from the amendment’s provisions, including:

  • Police officers or those involved in a position with a law enforcement or investigative function at the department of investigation
  • Government-appointed positions that involve “a high degree of public trust”
  • Positions requiring to be bonded under city, state or federal law
  • Roles requiring security clearance under federal law or the law of any state
  • Non-clerical positions having regular access to trade secrets, intelligence information or national security information
  • Positions with signatory authority over third-party funds or assets valued at $10,000 or more or that involve a fiduciary responsibility to the employer with the authority to enter financial agreements valued at $10,000 or more on behalf of the employer
  • Digital security systems positions established to prevent the unauthorized use of the employer’s or client’s networks or databases

Under the new amendment, employers may still request or receive consumer credit history information pursuant to a lawful subpoena, court order or law enforcement investigation.

Which Companies Use Credit Background Checks?

Forty-seven percent of companies perform credit background checks according to a 2012 survey performed by the Society of Human Resources Management. Of those, 45 percent of respondents cited theft reduction as the number one reason for using credit background checks, a percentage down from 54 percent in 2010.

The NYC ban on credit background checks and similar measures imposed by states like California and Illinois will force employers with locations nationwide to tighten their applicant screening process.

Which States Ban Credit Background Checks for Job Screening?

As of this writing, 11 states in the U.S. ban the use of credit reports for job applicant screening by most employers:

  • California
  • Colorado
  • Connecticut
  • Delaware
  • Hawaii
  • Illinois
  • Maryland
  • Nevada
  • Oregon
  • Vermont
  • Washington

This Employment Law News blog is intended for market awareness only, it is not to be used for legal advice or counsel.

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