NYC Worker

Hiring in NYC? Checking applicant credit history is now illegal

Using Consumer Credit History for Employment Purposes in New York City is Now Unlawful

On May 6, 2015, New York City Mayor Bill de Blasio signed legislation making it an unlawful discriminatory practice, with few exceptions, for employers to use a job applicant’s or current employee’s consumer credit history for hiring or employment purposes. When the law takes effect on September 3, 2015 , New York City will join the increasing number of cities and states that restrict using an applicant’s or employee’s credit history for employment purposes. For employers this is yet another rule that can cause employers to run afoul of the law during the hiring process.

Why Employers Run Credit Checks

For employers, checking an applicants credit history can serve as an independent measure of the persons ability to manage their affairs in a responsible manner ….and employers want responsible employees. Sure we all know someone (maybe even ourselves) that has gotten themselves into a problem with credit.  It happens, but a rational employer would consider the applicants situation and measure that against the responsibility level associated with the position.  The employer should be allowed to determine if it matters or not. Insurance companies do it, banks do it, so why should employers be restricted from considering an applicants credit history when making a hiring decision?

Legal Exemptions for Government

As usual the government loves to make laws for everyone else and then exempts themselves. According to the new rules the law does not ban employers considering consumer credit history of individuals applying for or employed in the following positions:

  • police officers or peace officers, or in a position with a law enforcement or investigative function at the New York City Department of Investigation (the “DOI”);
  • a position subject to a background investigation by the DOI, but only if the position is an appointed position that involves a high degree of public trust;
  • a position in which an employee must be bonded pursuant to New York City, New York State, or federal law;
  • a position where security clearance is mandated for the employee under federal law or the law of any state;

For Private Businesses there are more restricted legal exceptions:

  • a non-clerical position in which the employee has regular access to intelligence information, national security information, or trade secrets (the term “trade secrets” does not include general proprietary company information such as handbooks and policies, and “regular access” to trade secrets does not include access to or the use of client, customer, or mailing lists);
  • a position having signatory authority over third-party funds or assets valued at $10,000 or more;
  • a position in which the employee has a fiduciary responsibility to the employer with the authority to enter financial arrangements valued at $10,000 or more on behalf of the employer; or
  • a position with regular duties that permit the employee to modify digital security systems established to prevent the unauthorized use of the employer’s or client’s networks or databases.

The law appears to apply to all employers who hire or employ individuals in New York City. It is not clear if the law applies to out of state companies who hire a person in NYC or applies to NYC domiciled companies who hire someone living outside the city.

State and Local Governments Dictating Employment Practices, Where Does It End?

The onslaught of state and local government interference with free market decisions made voluntarily by companies and citizens continues to increase.  While individually these laws are well intentioned, it totality the mountain of regulatory employment laws become oppressive to a free and prosperous economy.  We now are entering a time when every governmental jurisdiction thinks it has the authority to regulate local employment with minimum wage rules, sick leave policy, hiring practices, income taxing and on and on.  Employers with employees in multiple locations may be subject to rules that they have no clue about.  Until sanity returns, Hiring a Professional Employer Organization – PEO can bring peace of mind to employers seeking regulatory compliance for hiring practices and the consequence of legal violations.