New York City Prohibits Use of Employment Credit Reports

Nick Fishman

New York City

Earlier this week, the New York City Council passed a bill that makes it unlawful for employers to request or use an job applicant’s credit history for employment purposes as part of their background screening practices. Intro Bill 261-A amends the City’s Human Rights Law to make it an unlawful discriminatory practice for an employer to use an individual’s consumer credit history in making employment decisions. The bill is expected to be signed by Mayor Bill DeBlasio and will be effective 120 days following approval.

The city council created a limited set of exemptions for sensitive positions (see below), however it’s worth noting that these exemptions are much more narrow than those provided in similar state laws.

Bill Exemptions:

  • an employer, or agent thereof, that is required by state or federal law or regulations or by a self-regulatory organization as defined in section 3(a)(26) of the securities exchange act of 1934, as amended to use an individual’s consumer credit history for employment purposes
  • persons applying for positions as or employed:
    • (A) as police officers or peace officers, as those terms are defined in subdivisions thirty-three and thirty-four of section 1.20 of the criminal procedure law, respectively, or in a position with a law enforcement or investigative function at the department of investigation;
    • (B) in a position that is subject to background investigation by the department of investigation, provided, however, that the appointing agency may not use consumer credit
    • (C) in a position in which an employee is required to be bonded under City, state or federal law;
    • (D) in a position in which an employee is required to possess security clearance under federal law or the law of any state;
    • (E) in a non-clerical position having regular access to trade secrets, intelligence information or national security information;
    • (F) in a position: (i) having signatory authority over third party funds or assets valued at $10,000 or more; or (ii) that involves a fiduciary responsibility to the employer with the authority to enter financial agreements valued at $10,000 or more on behalf of the employer.
    • (G) 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.

New City City joins ten states which currently prohibit the use of employment credit reports except in limited circumstances: California, Colorado, Connecticut, Illinois, Hawaii, Maryland, Nevada, Oregon, Vermont and Washington.

Employers in New York City that conduct employment credit reports are encouraged to review their policies and practices to determine if they qualify for the aforementioned exemptions.

Download our guide to help determine if credit reports are right for you.

Nick Fishman
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Nick Fishman

Nick Fishman is the co-founder of EmployeeScreenIQ, a leading, global employment background screening provider, and serves as the company’s executive vice president and chief marketing officer. He pioneered the creation of EmployeeScreen University, the #1 educational resource on employment background checks for human resources, security and risk management professionals. A recognized industry expert, Nick is a frequent author, presenter and contributor to the news media. Nick is also a licensed private investigator in the states of Ohio and Texas.
Nick Fishman
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