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Legislative Limitations on Employers Use of Credit Information of Employees and Applicants in New Yo

On September 3, 2015, the “Stop Credit Discrimination in Employment Act” went into effect. The law permits employers to only request and consider the consumer credit history information of applicants and employees in certain, limited circumstances, as well as in response to any lawful subpoena, court order or law enforcement investigation. The purpose of the law is to prevent discrimination against applicants or employees with respect to hiring, compensation, or the terms, conditions, or privileges of employment based on their consumer credit history. There are certain exemptions for which employers are required by law, regulation, or self-regulatory purposes to use an individual’s consumer credit history for employment purposes.

Those exemptions are:

  1. Employees or applicants who are required to register with FINRA (Financial Industry Regulatory Authority)

  2. Non-clerical positions that entail regular access to trade secrets

  3. Any position with responsibility for funds or assets valued at $10,000 or more

  4. Positions with regular duties that allow the employee to modify digital security systems established to prevent the unauthorized use of networks or databases of the employer or the employer’s client

The entity that oversees the enforcement of this legislation is the New York City Commission on Human Rights. They have issued guidance documents, which state that the exemptions should be narrowly construed, do not apply to entire employers or industries, and apply to positions/roles as opposed to the individual employee or applicant. The exemptions do not cover most lower-level employees which include, but are not limited to, cashiers, clerical workers, bank tellers, salespeople, administrative staff, private security employees, and restaurant/bar workers.

An employer who wishes to claim an exemption should adhere to the following procedure:

Inform the applicant or employee of the claimed exemption and keep a detailed log of all exemptions utilized for five years from the date the exemption is used. The log should include details regarding:

  1. The exemption claimed

  2. Why the exemption is applicable

  3. The name and contact information for all individuals considered for the exempted position

  4. The job duties of the position

  5. The qualifications necessary to perform the position

  6. A copy of credit history obtained for all individuals for whom the exemption was claimed

  7. Details on how the credit history was obtained

  8. Details on how the credit history results in the employment action taken.

Failure to adhere to these requirements can cause the employer to incur severe civil penalties (up to $250,000 for willful, wanton or malicious violations, and up to $125,000 for other violations).

As with all regulatory, statutory and case precedents, companies need to be even more diligent when drafting policies and procedures. If you need any assistance with regard to this or any other labor or employment matter, please contact or call (516) 921-3400.


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