On September 3, 2015, a new law will go into effect which prohibits many private sector employers in New York City from requesting or using an employee’s or applicant’s consumer credit history. Additionally, later this fall, New York City will begin to regulate employers' use of criminal history for pre-employment screening. Employers should scrutinize their pre-employment paperwork and hiring practices to ensure that they comply with these new laws.
- Employers required by state or federal law or regulations or a self-regulatory organization to use an individual’s consumer credit history for employment purposes;
- Certain public sector positions, including law enforcement or appointed positions entailing a high degree of public trust;
- Positions in which an employee is required to be bonded under City, state or federal law;
- Positions which require security clearance under state or federal law;
- Non-clerical positions having regular access to trade secrets, intelligence information or national security information;
- Positions having signatory authority over third-party funds or assets valued at US$10,000 or more; or that involve a fiduciary responsibility to the employer with the authority to enter financial agreements valued at US$10,000 or more on behalf of the employer; or
- Positions with regular duties that allow the employee to modify digital security systems established to prevent the unauthorized use of the employer’s or client’s networks or databases.
Moreover, even if the position is subject to one of the enumerated exceptions, employers must be careful to follow the federal Fair Credit Reporting Act and state law when requesting and utilizing employees‘ or applicants’ consumer credit information.
Additionally, as noted above, New York City has enacted a law known as the Fair Chance Act, which will also soon prohibit employers from making any inquiry, whether to the applicant or through public records, about an applicant’s criminal record until after a conditional offer of employment is extended to the applicant. Once the conditional offer is made, the employer can make inquiries into criminal history but will have to follow certain steps before taking any adverse action based on information disclosed through the inquiry, including providing the criminal history and an analysis of how that history impacts the proposed employment “in a manner to be determined by” the NYC Commission on Human Rights. As the Fair Chance Act becomes effective October 27, 2015, the Commission is expected to issue guidance soon.
Both of these changes in the law will require most employers operating in New York City to revise their initial employment application forms to eliminate credit history or criminal history questions from such forms and to re-evaluate when and how they seek such information, if at all. In this regard, New York City joins a host of other jurisdictions that have been active in regulating the pre-employment use of credit or criminal history, including California, Connecticut, Illinois, and Washington, D.C.
Eric G. Hoffman
+1 212 839 5939
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