New York City Prohibits Use of Credit Reports for Employment Purposes - A Creative Services, Inc. Compliance Corner Article

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New York City Prohibits Use of Credit Reports for Employment Purposes


On April 16, 2015, the New York City Council passed New York City Bill Int-261-2014 A, a bill that amends the city’s Human Rights Law and makes 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.

New York City joins a growing list of jurisdictions that have enacted similar laws prohibiting the use of credit reports for employment purposes, including California, Chicago, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington.

Who Is Impacted?
The bill will become a new part of the New York City Human Rights Law (NYCHRL), it will extend to employers of four or more employees.

Bill Exemptions
Due to the sensitive nature of various employment positions that require additional layers of security, the bill provides exceptions for a limited number of positions.

  • 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 history information for employment purposes unless the position is an appointed position in which a high degree of public trust, as defined by the commission in rules, has been reposed;
(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.

Next Steps for Employers
Employers in New York City that conduct employment credit reports should review their policies and procedures to determine that they are in compliance with the new rules and to see if they qualify for any of the exemptions. Also, multi-state employers may want to revisit their practices to help ensure that they comply with both this bill and the laws of the many jurisdictions that now regulate employers' use of information related to one's credit history.

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