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Human Rights

Combating Discrimination Since 1955


Credit Check Law


Credit Check Law: For Employers

NEW YORKERS ARE MORE THAN THEIR CREDIT SCORES

NYC just passed the nation’s strongest ban on employment credit checks. Let’s grow New York businesses and workforces with fairness and equal opportunity for all.
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Information for Employers

The NYC Commission on Human Rights (NYCCHR) is reaching out to NYC businesses and employers to provide them with information regarding an important change in the law affecting their employment application processes and other employment decision-making processes. NYCCHR is here to serve as a resource to help you strengthen your business, become a more inclusive employer, and conform your employment practices to comply with the NYC Human Rights Law (NYCHRL).
Before you run a credit check or ask job applicants or current employees questions related to their credit history, STOP. As of September 3, 2015, the NYCHRL will restrict the use of credit information in employment for most employers. NYCCHR is providing free trainings in every borough to help NYC employers comply with their obligations under the law and grow their workforce with equal opportunity for all.
Because there is no evidence linking poor credit to job performance, the law prohibits the use of credit in employment decisions for almost all positions. You cannot ask job seekers or current employees about their credit history, which includes credit worthiness, credit capacity, and payment history. You cannot request a credit report or ask about credit accounts, charged-off debts, items in collections, bankruptcies, judgments, and liens. It is against the law to ask questions about home foreclosure and information about credit card debt, child support, and student loans. Credit history cannot be used to decide whether to hire, fire, or promote an individual.
Most employers cannot run a credit check on a job applicant or current employee. Employment forms requiring applicants to authorize a credit or background check violate the law. You are also prohibited from using consumer reporting agencies or third party companies, services, and websites to examine a person’s credit history.
Even if credit checks have been part of your application process in the past, such practices may expose you to liability under the NYCHRL if you continue to use them past September 2, 2015. The law does not prevent employers from otherwise looking into job applicants’ background and experience to research their qualifications for a position, including asking for resumes and references, and performing direct online searches (e.g., Google, LinkedIn, etc.).

Does the NYCHRL cover my business?

Yes, if you have four or more employees (including owners), or one or more domestic worker. For an employer with four or more employees, the four employees need not work in the same location, nor all work in NYC.

Does the NYCHRL cover my potential or current employee?

In most cases, yes. Many people have rights under the NYCHRL, even if they are not full-time employees, including interns, undocumented workers, domestic workers, most independent contractors, and probationary and part-time employees.
There are just a few positions for which you are still allowed to ask about credit history, do a credit check, and use credit history in an employment decision.
These positions include:

Police and peace officers (not private security guards); and

Executive-level jobs with power over finances, computer security, or trade secrets.

This law covers you even if you are hiring for positions like bank tellers, cashiers, movers, construction workers, salespeople, clerical and administrative staff, and restaurant and bar workers.

What is the best way to comply with this law?

Employers can avoid liability by not asking potential or current employees about their credit, not running credit checks, and not considering credit history information in employment decisions.
If you believe a position at your business is exempt from this law, check with an attorney knowledgeable about the change in the law before you risk legal exposure.
You should inform applicants/employees of the exemption you believe applies and keep a record of use of exemptions in employment practices for a period of five years from the date an exemption is used. Keeping an exemption log will help your company respond to Commission requests for information. Your exemption log should include the following:

which exemption is claimed;

how the applicant/employee fits into the exemption;

qualifications of the applicant/employee for the position/promotion;

name and contact information of applicant/employee;

nature of the credit history information considered and a copy of such information;

how the credit history information was obtained; and

how credit history impacted employment action.

Employers may be required to share their exemption logs with the Commission upon request. Prompt responses to Commission requests may help you avoid a Commission investigation into your practices.
Employers who violate the NYCHRL may have to pay lost wages and other damages to the employees affected and may be subject to civil penalties of up to $125,000. A willful violation may be subject to a civil penalty of up to $250,000.
Additional guidance and information about free trainings on how to comply with the law are available at nyc.gov/humanrights.

Take Our Survey

Are you a hiring manager or business owner in New York City? The New York City Commission on Human Rights needs your help with a short four-question anonymous survey. We’re asking local businesses to share their experiences with hiring and credit checks over the past 2 years.

Click Here To Start the Survey

Please note: Your responses to this survey are completely anonymous. If you have any questions, please contact Edwin Tablada at etablada@cchr.nyc.gov. We appreciate your assistance and thank you for providing feedback.