CLIENT UPDATE

Putney, Twombly, Hall & Hirson LLP
521 Fifth Avenue
New York, NY 10175
Tel: (212) 682-0020

 

May 8, 2015

New York City Bans Employment-Related Credit Checks

On May 6, 2015, Mayor Bill de Blasio signed into law an amendment to the New York City Administrative Code, prohibiting employment discrimination based on consumer credit history (the “Amendment”). The Amendment prohibits employers (defined as those with four (4) or more employees), with limited exceptions, from requesting or using for employment purposes the consumer credit history of an applicant or employee or from otherwise discriminating against an applicant or employee based on the individual’s consumer credit history. The Amendment will take effect on September 3, 2015 – 120 days from its enactment.

The Amendment defines “consumer credit history” as an individual's credit worthiness, credit standing, credit capacity, or payment history, as indicated by

  • a consumer credit report;
  • credit score; or
  • information an employer obtains directly from the individual  regarding
    • details about credit accounts, including the individual's number of credit accounts, late or missed payments, charged-off debts, items in collections, credit limit, prior credit report inquiries; or
    • bankruptcies, judgments or liens.

Although employers are broadly prohibited from requesting or using such information, the Amendment does not prevent employers from responding to a lawful subpoena, court order or law enforcement investigation. Further, the Amendment does not apply to employers required by state or federal law to use an individual’s consumer credit history for employment purposes. The Amendment also does not apply to certain positions, including, but not limited to, positions (1) that are non-clerical in nature and have regular access to trade secrets (as defined below), intelligence information or national security information; (2) having signatory authority over third party funds or assets valued at $10,000 or more; or (3) involving a fiduciary responsibility to the employer with the authority to enter financial agreements valued at $10,000 or more on behalf of the employer. The term “trade secrets” means information that derives independent economic value from not being generally known, is the subject of reasonable efforts to maintain its secrecy, and can reasonably be said to be the end product of significant innovation.

Takeaway For Employers

Once in effect, the Amendment will provide aggrieved individuals with a private right of action. Employers must be particularly mindful if they contract with third-parties to conduct background checks, that such background checks do not include a request for an individual’s consumer credit history.

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If you have any questions regarding conducting employee background checks, please do not hesitate to contact us.