NYCCHR Issues Guidance on Credit Check Law

Proskauer - Law and the Workplace

The New York City Commission on Human Rights (the “Commission”) has just issued guidance in respect of the Stop Credit Discrimination in Employment Act (the “SCDEA”), which goes into effect September 3, 2015 and modified the New York City Human Rights Law to place limitations on employers’ ability to conduct credit checks on employees and applicants for employment.  See below for our previous posts on the new law.

Key takeaways from the guidance include the following:

  • No exemption applies to an entire employer or industry. Rather, exemptions apply to positions or roles.
  • The exemptions will be read narrowly. The Commission indicates in “Frequently Asked Questions” accompanying the guidance that “the exemptions do not include most entry-level, non-salaried employees” and indicates that “bank tellers, cashiers, salespeople, clerical workers, administrative staff, restaurant and bar workers, and private security employees” are not covered by an exemption. In addition:
    • With respect to the exemption for employers who are legally required to consider credit history for employment purposes:
      • FINRA members (and members of other self-regulatory organizations) are exempt only when making employment decisions about “covered persons” and must comply with the law when making decisions regarding positions that are not identified as “covered” under FINRA rules. The guidance defines “covered persons” to include “senior management, supervisors, managers, and others responsible for approving or authorizing work . . . and other people with the authority or discretion to materially commit a FINRA member’s capital [] or bind a FINRA member in contract.”
      • The only New York law requiring evaluation of consumer credit history applies to licensed mortgage loan originators.
    • The exemption for positions with responsibility for funds or assets worth $10,000 or more applies only to executive level positions with financial control over the company (such as a CFO or COO) and does not include all staff in a finance department.
    • The exemption for positions requiring bonding applies only if bonding is legally required (not simply permitted) for the specific position. (The guidance identifies the following as examples of positions that are required to be bonded: bonded carriers for U.S. Customs, harbor pilots, pawnbrokers, ticket sellers and resellers, auctioneers and tow truck drivers.)
    • The digital security systems exemption includes executive level positions (such as a Chief Technology officer or a senior IT executive who controls access to the system) and does not include all persons who access a computer system or even all employees in an IT department.
    • With respect to the exemption for employees with access to trade secrets, trade secrets do not include information – such as recipes, formulas, customer lists or processes – that is regularly collected in the course of business or regularly used by entry-level and non-salaried employees and supervisors or managers of such employees.
    • There also is guidance regarding the exceptions for public safety positions and positions requiring security clearance.
  • When running a credit check, employers must inform the applicant or employee of the claimed exemption.
  • Employers must keep a record of their use of exemptions (i.e., of credit checks run and the exemption claimed for each) for a period of 5 years form the date the exemption is used.
  • Employers should keep an exemption log, which they may be required to share with the Commission, that includes:
    • The claimed exemption;
    • Why the claimed exemption covers the exempted position;
    • The name and contact information of all applicants or employees considered for the exempted position;
    • The job duties of the exempted position;
    • The qualifications necessary to perform the exempted position;
    • A copy of the applicants or employee’s credit history that was obtained pursuant to the claimed exemption;
    • How the credit history was obtained; and
    • How the credit history led to the employment action.
  • The Commission will impose civil penalties of up to $125,000 for violations and up to $250,000 for violations resulting from willful, wanton or malicious conduct, with the amount of the penalty to be determined by considering the severity of the violation, the existence of subsequent violations, the employer’s size (in terms of number of employees and revenue) and the employer’s actual or constructive knowledge of the SCDEA.  Such fines are in addition to the remedies available to people who resolve or prevail on a claim (such as back and front pay and compensatory and punitive damages).


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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