Proposed New York City Bill Would Ban Credit Checks from Hiring Process

On April 11, 2013, the New York City Council’s Committee on Civil Rights debated a proposed bill that would ban employers from using credit checks to evaluate prospective employees. The proposed bill, called the Stop Credit Discrimination in Employment Act (the “SCDEA”), would create a blanket ban on using credit information for hiring purposes, with a narrow exception only where employers are required to use such information by state or federal law.

Similar versions of the SCDEA exist in eight other states and Chicago, however, each of those bills contain various exceptions permitting employers to review an applicant’s credit history for certain types of jobs.

Proponents of the SCDEA believe it will curb employers’ discriminatory use of credit information which they contend prevents potentially qualified individuals from being hired. Due to the growing unemployment rate in New York City, a larger population of job seekers may have a strained credit history that could negatively impact their ability to gain employment. Meanwhile, those who oppose the bill caution that it will impair employers’ ability to insure the integrity of certain positions, such as those in finance and insurance.

Debate over the SCDEA comes in the wake of the recently passed amendment to the New York City Human Rights Law, Bill 814-A, which provides unemployed applicants a private right of action against employers who consider an individual’s unemployed status during the hiring process. The combination of these bills demonstrates the City Council’s intent to protect unemployed city residents.

The proposed bill must still be passed by the Committee on Civil Rights and then approved by the heavily Democratic City Council. However, an attorney representing Mayor Bloomberg’s administration at the debate over the SCDEA indicated that the Mayor would veto the bill should it pass through the City Council in its current form.

Although the SCDEA has not yet been enacted, it carries significant implications for New York City employers should it be passed into law. Employers who currently rely on credit information may be forced to alter hiring practices and seek alternative methods for ensuring the hiring of qualified employees. We will continue to monitor the status of the SCDEA and provide updates as they occur.