New York City Prohibits Most Uses of Consumer Credit Reports in Hiring and Other Employment Decisions

The New York City Council passed legislation in April 2015 amending the city’s anti-discrimination law to prohibit employment discrimination based on information found in an employee’s or job applicant’s consumer credit history. This is part of a broader trend of laws at the city and state levels around the country that limit the use of background checks when making employment decisions. Similar laws have been introduced in the New Jersey Legislature, but they have not passed either chamber. New Jersey law offers some protection for consumers with regard to their credit information, including restrictions on when and how employers may access credit reports.

The federal Fair Credit Reporting Act (FCRA), the New Jersey Fair Credit Reporting Act (NJFRCA), and other statutes regulate the collection, distribution, and use of information by credit reporting agencies. These statutes define “consumer reports” in part as financial and personal information about a consumer, communicated in writing or verbally, that is intended for use “in establishing the consumer’s eligibility for…employment purposes.” 15 U.S.C. § 1681a(d)(1)(B), N.J. Rev. Stat. § 56:11-30(1)(b), N.Y. Gen. Bus. L. § 380-A(c)(1)(ii). Under New Jersey law, an employer may not obtain a person’s credit report unless they provide notice in a particular form to the person and obtain the person’s consent. N.J. Rev. Stat. § 56:11-31c.

The New Jersey statute does not prohibit an employer from taking adverse action against an employee or job applicant based, in whole or in part, on information contained in a consumer report. If the employer does take adverse action against a person, however, it must first provide the person with a copy of their consumer report and a notice of their rights under the NJFCRA and the FCRA. N.J. Rev. Stat. § 56:11-31e.

Several recent bills in the New Jersey Legislature would prevent discriminatory actions. AB 2840, introduced in May 2012, would have prohibited employment discrimination against current or prospective employees “based on information in a credit report on the employee.” The last action on the bill was a report out of the Assembly Women and Children Committee in March 2014.

The New York City Council passed a law amending the New York City Human Rights Law (NYCHRL) on April 16, 2015, and the mayor signed it on May 6. The law adds a definition of “consumer credit history” to the NYCHRL, which includes a “consumer credit report,” credit score, and certain types of financial information obtained directly from the consumer. N.Y.C. Admin. Code § 8-102(29). It prohibits employment discrimination “based on the consumer credit history of the applicant or employee.” N.Y.C. Admin. Code § 8-107(24).

The amendments to the NYCHRL make exceptions for certain employers and employees, such as employers who are required to perform credit history checks under the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., jobs that require bonding, and any position that requires security clearance under federal or state law. Employees and job applicants may still be subject to credit history checks for certain city jobs, including police or peace officer.

If you need to speak to an employment discrimination attorney in New Jersey or New York, contact the Resnick Law Group today through our website, at 973-781-1204, or at (646) 867-7997.

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