The New York City Council recently passed two pieces of legislation that will change the way many employers conduct and use background checks with respect to applicants and employees. First, the City Council approved a bill amending the New York City Human Rights Law, NYC Administrative Code, § 8-101 et seq. ("NYCHRL") to prohibit most employers from making employment decisions based on an applicant’s or employee’s consumer credit history. The law went into effect on September 3, 2015. Second, the Council passed a bill to amend the NYCHRL to further limit employers from inquiring into or considering an applicant’s or employee’s criminal history in employment decisions. This law went into effect on October 27, 2015.
Credit History Discrimination Ban
On April 16, 2015, the NYC Council passed the "Stop Credit Discrimination in Employment Act" by a vote of 47-3, and on May 6, 2015, the Mayor signed that bill into law. The law adds a new provision to the NYCHRL making it an "unlawful discriminatory practice" for employers to request or use for employment purposes the consumer credit history of an applicant or employee, except in limited circumstances, such as:
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When required by state or federal law or regulations;
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When required by a self-regulatory organization as defined by the Securities Exchange Act of 1934. The term "self-regulatory organization" means any national securities exchange, registered securities association, or registered clearing agency, such as FINRA. Broker-dealer firms subject to FINRA’s regulatory authority may request certain credit check information from registered job applicants under FINRA Rule 3110(e), which became effective on July 1, 2015. That rule requires FINRA members to verify information provided on the applicant’s Form U-4, such as disclosures about bankruptcies and outstanding judgments or liens;
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For employment as a police officer or certain positions with the New York City Department of Investigation;
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For positions in which an employee is required to be bonded under city, state or federal law;
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For positions in which an employee is required to possess security clearance under federal or state law;
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For nonclerical positions having regular access to "trade secrets" (which is defined under the law and specifically excludes client, customer or mailing lists);
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For positions that have signing authority over third-party funds or assets of $10,000 or more or that involve fiduciary responsibility to the employer with authority to enter financial agreements on behalf of the employer for amounts of $10,000 or more; or
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For computer security positions where the regular duties allow the employee to modify digital security systems established to prevent the unauthorized use of an employer’s or client’s networks or databases.
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