New York City, later this week (as of September 3, 2015) will restrict the use of credit reports as part of the employment hiring decision. Except under limited circumstances, it will be illegal for employers to utilize and consider an individual’s consumer credit history in the employment process – be it at initial hire, or later during the employment process, i.e., to determine future compensation, job promotion, etc.

New York City joins ten states that have some type of legislation which curtail the use of credit reports in the employee hiring process. Those states include: California, Colorado, Connecticut, Hawaii, Illinois, Nevada, Oregon, Vermont and Washington. However, unlike most of these states that have a plethora of exceptions, the law in New York City (Int. No. 261, which amends the New York City Human Rights Law), is much more restrictive.

Some of the exemptions, which would allow the use of credit reports in the hiring process include:

(1) If required by any national securities exchange

(2) Employment positions with signing authority of $10,000 or more

(3) Jobs requiring security clearance under state or federal laws, such as police officers, and other jobs involving sensitive public information

(4) Jobs requiring that employees be bonded, and

(5) If required by federal, state, or other law.

It should be noted that there is no clear-cut exemption for all bank positions, and/or exemption for individuals who handle cash.

Also, this new law will impact all companies with New York City operations, even if the employer is headquartered in another state.

Posted by: Rudy Troisi. President, Reliable Background Screening.