The New York City Council recently passed Intro 261A, a bill that prohibits most employers from basing hiring and employment decisions on credit history. The Councilmember who sponsored the bill, Brad Lander, said that credit checks are unrelated to job performance and can result in discrimination. “Millions of Americans who have bad credit, would also be great employees,” he asserted. “What they need to repair their credit is a job, and to make it harder for them to get a job is the definition of unfair.” Council Speaker Melissa Mark-Viverito voiced her approval of the bill, stating that the use of credit checks disparately impacts groups such as minorities and victims of domestic violence. “All New Yorkers deserve the chance to compete for a job based on their skills and qualifications, not three digits on their financial report,” she said. The bill was passed by 47 of 51 council members, and is now headed for the mayor’s office, where it is expected to receive a signature. If it is signed, it will go into effect after 120 days. Exceptions to the bill There are several exceptions to the bill. Employers are still permitted to use credit checks for:
  • Police officer positions
  • Jobs that are subject to NYC Department of Investigation background checks
  • Positions that involve fiduciary duties
  • Jobs that require a government security clearance
  • Jobs that present cyber security risks, require national security information, or involve access to trade secrets
  • Situations where the employer is required by state or federal law to use credit checks (for example, securities broker-dealers)
The bill uses a broad definition of credit history According to the bill, “consumer credit history” consists of not only credit reports and credit scores, but also information from the employee or applicant about prior judgments, bankruptcies, liens, and “details about credit accounts.” The bill defines the latter category as “the individual’s number of credit accounts, late or missed payments, charged-off debts, items in collections, credit limit [and] prior credit report inquiries.” It also provides a broad interpretation of the term “consumer credit report” that includes “any written or other communication of any information by a consumer reporting agency that bears on a consumer’s creditworthiness, credit standing, credit capacity, or credit history.” Contact the Akin Law Group If you have any questions regarding this bill, or any other aspect of employment law, contact the Akin Law Group at 866.685.5163.