Earlier this year, the New York City Council passed the “Stop Credit Discrimination in Employment Act,” which prohibits NYC employers from using credit histories to discriminate against potential employees. If passed as expected, the bill will be consistent with the federal Fair Credit Reporting Act, which also restricts employers’ use of credit histories and background checks in employment decisions.

As noted by the Association of Credit and Collection Professionals, there is evidence that credit reports often are erroneous, and that a person’s credit history has little bearing on his or her ability to perform a job or as a sign of trustworthiness.

The bill does not ban employee credit checks completely. Instead, they can be used in employment decisions when:

  • State or federal law requires a credit check
  • The position involves public trust, like a police officer or high level city employee
  • The position involves potential cyber security risks or breach of fiduciary duties
  • The potential employee has the ability to enter into financial agreements valued at $10,000 or more.

The bill seeks to give job applicants a chance to compete for jobs based on their qualifications and skills and not be precluded because they may have struggled to pay bills, especially medical or student loans. In fact, because medical debts are commonplace, the state of New York also recently revealed a plan to delay reporting of medical debts to credit reporting agencies. Under this plan, medical debts cannot be reported to credit agencies until 180 days after the beginning of the delinquency or collection action on the account began.

When credit reports are used to discriminate against those applying for jobs or promotions, that’s a violation of state and federal employment laws. If you have been unlawfully subjected to a discriminatory credit check by an employer and suspect that your rights were violated, please contact the attorneys in Sommers Schwartz’s Employment Litigation Group today.

Kevin J. Stoops

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Kevin J. Stoops

Kevin Stoops is an experienced trial attorney who appears frequently in Michigan state courts and federal courts across the United States, representing clients in complex business litigation. He has vast experience and a track record of successful outcomes high-dollar matters involving trade secret, business tort, intellectual property, executive employment, and class action claims.