December 6, 2022

Volume XII, Number 340


December 06, 2022

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December 05, 2022

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Credit Checks To Be Banned in NYC

Yesterday, by a 47-3 vote, the New York City Council passed a bill (Int. 0261-2014) to amend the NYC Human Rights Law to prohibit most employers from inquiring into or considering a prospective or current employee’s credit history when making employment decisions. Mayor DeBlasio is expected to sign the bill into law.

The bill expansively defines “credit history” to encompass not only a consumer credit report or credit score, but information directly obtained from the applicant or employee regarding his or her (i) prior bankruptcies, judgments, or liens, or (ii) number of credit accounts, late or missed payments, charged-off debts, items in collections, credit limit, or prior credit report inquiries.

The ban will not apply to:

  • positions with (i) signatory authority over third party funds or assets valued at $10,000 or more, or (ii) 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;

  • employers required to consider credit history for employment purposes under state or federal law/regulations 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, Department of Investigation personnel, and other individuals subject to a background investigation by the Department);

  • positions requiring bonding under federal, state, or city law (e.g., certain positions  in finance); and

  • positions requiring security clearance under federal or any state law.

The bill affords aggrieved applicants and employees a private right of action with the promise of generous remedies.

If the Mayor signs the bill, NYC would join ten states—California, Maryland, Connecticut, Hawaii, Illinois, Washington, Oregon, Vermont, Colorado, and Nevada—and at least two localities—Chicago and Madison (WI)—in restricting the use of credit history for purposes of employment.  The NYC ban, however, will be one of the broadest bans in the nation.

If the bill becomes law, NYC employers will need to review and modify background check procedures and policies to ensure compliance.

© 2022 Proskauer Rose LLP. National Law Review, Volume V, Number 107

About this Author

Katharine H Parker, Labor Employment Attorney, Proskauer Rose Law Firm

Katharine Parker is a Partner in the Labor & Employment Law Department and co-head of the Employment Law Counseling & Training and Government Regulatory Compliance and Relations Groups.

Daniel L Saperstein, Proskauer Law Firm, Labor Employment Attorney

Daniel L. Saperstein is an Associate in the Labor & Employment Law Department, resident in the Newark office. He is a member of the Employment Litigation & Arbitration, Labor-Management Relations, Employment Law Counseling & Training, International Labor & Employment, and Whistleblower & Retaliation Groups, as well as the Dodd-Frank Task Force.