The New York City Council has approved a new bill that will amend the city’s current Human Rights Law, making it illegal for employers to request or use a job applicant’s credit history as part of their hiring decision.
NYC Council members voted 47-3 in favor of the Stop Credit Discrimination in Employment Act on April 16, 2015. According to local news agencies, the bill will take effect 120 days after Mayor de Blasio signs it. Assuming Mayor de Blasio signs it, which he expected to do so, the majority of employers operating within the boundaries of New York City will be prohibited from using credit reports to make employment decisions. There are certain exceptions for the bill, however, such as jobs involving a heightened state of security.
The New York City Human Rights Law (NYCHRL) offered similar protection for small businesses with fewer than four employees. But the new bill offers an even greater level of protection, with most city employees receiving full protection from credit checks being used as part of their employers’ hiring decision.
Under the Fair Credit Reporting Act (FCRA), employers allowed to obtain criminal records, motor vehicle driving records, consumer reports and credit history checks on job applicants, assuming it’s used for employment purposes.
So, why did the New York City Council feel the need to pass its own bill, contradicting the FCRA? As noted by NY Council member Brad Lander, the use of credit checks prevents New York residents from finding jobs. When an employer discovers a red mark on a job applicant’s credit history – late payments, collections, foreclosure, bankruptcy, etc. – he or she may deny the applicant the position, assuming it reflects their work ethics.
“Credit checks for employment unfairly lock New Yorkers out of jobs,” said Council member Brad Lander. “So I’m proud that the Council is passing the strongest bill of its kind to end discriminatory employment credit checks. Just this week, we heard from a recently laid-off single mom, worried about finding a new job because of her daughter’s college loans on her credit report. She wrote that this law gives her a new lease on life.”
Furthermore, a study conducted by the U.S. Public Interest Research Group in 2004 found that approximately 79% of consumer credit reports contained at least one error. With such a high margin for error, it only makes since for the City Council to prohibit the use of credit checks in employment decisions.
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