NYC employers cannot use credit scores when making employment decisions

On behalf of Philip Taubman

A new law, effective in September, 2015, will prevent employers from refusing to hire applicants with bad credit.

Certain life events can impact your credit score. Medical issues, divorce, and a host of other factors can mean that your credit is not where you would like it to be. This does not mean that you are untrustworthy, lazy or unwilling to pay debts. In fact, chances are you would like nothing better than to work hard, make money and regain solid financial footing.

Unfortunately, employers can be reluctant to hire people with bad credit. It is also becoming commonplace across the country for employers to run credit checks on applicants. Nearly have of U.S. employers run a credit background check before hiring an applicant, according to a 2012 survey by the Society for Human Resource Management.

A new law in New York City may stop the practice, at least for NYC applicants. Under the "Stop Credit Discrimination in Employment Act," passed into city law on May 6, 2015, employers can request and consider credit history in employment decisions in only a limited number of situations. These include:

  • Positions under which a credit check is required by law or regulating authority (such as by FINRA or the SEC)
  • Some public safety positions
  • Positions that require the employee to be bonded
  • Positions that involve a fiduciary duty to employer with the authority to enter the employer into financial agreements

The law goes into effect in September of this year. After that date, unless you fall into one of the narrow exceptions, your credit history should not affect your ability to find work. Outside of NYC, federal law requires employers to get permission to run a background check, including a credit check, although it does not break any federal anti-discrimination laws to make employment decisions based on the results of a credit check.

Upon passage of the bill in the New York City Council, the bill's sponsor said that "this is a civil rights bill," noting "millions of Americans who have bad credit would also be great employees." Not allowing someone who went through a rough financial period the ability to find work is discriminatory, and now codified by New York City law. Nevada, California and Maryland have already enacted similar legislation. New York has yet to do so at the state level.

Have you been discriminated against?

Refusing to hire, terminating, or otherwise treating employees and applicants differently based on a restricted class is against the law. In New York City, protected classes include race, religion, gender, sexual orientation, and criminal and credit history. If you have experienced an adverse employment event based on one of these protected classes, you have legal rights. These include the potential for back pay, reinstatement to a position, and other monetary damages.

At Taubman Kimelman & Soroka, LLP, our attorneys have significant experience protecting the rights of workers in New York City. Contact our office to discuss your legal options and rights.

Keywords: Credit check, employment, employment laws, New York City, Stop Credit Discrimination in Employment Act, wrongful termination, discrimination, refusal to hire.