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Employee Credit Checks: How Does New York Score?

According to statistics, nearly half of all U.S. employers rely on the information contained within a candidate’s credit report when making hiring decisions, regardless of whether the position actually requires strong credit or is even remotely related to the financial industry.

In response to this phenomenon, advocates in New York City and many other jurisdictions are urging lawmakers to pull back the reins on employers’ ability to run credit checks on candidates for a job – except where required by law (e.g., mortgage lenders or financial sector employees).

The purpose of the limitations is to address major collateral disparities occurring by minority populations who are being unfairly targeted by the existence of a mediocre or poor credit history. In fact, in January, 2015, the Coalition to Stop Credit Checks in Employment issued an open letter to New York City Mayor De Blasio and the New York City Council urging the community leaders to enact municipal legislation ending the practice and the unfair discrimination that inevitably stems therefrom.

Employment Discrimination Through Unnecessary Credit Checks

With the exception of certain employment positions directly related to handling, lending, or investing money, the Coalition points out that the vast majority of jobs – and the excellent performance thereof – do not depend whatsoever on the status of the employee’s credit history report. Several positions were highlighted by the advocacy group as being unaffected by the results of a credit check, including:

  • Employees tasked with handling valuable goods, property or large sums of cash. According to reports from agencies responsible for issuing credit reports and histories, “we don’t have any research to show any statistical correlation between what’s in somebody’s credit report and their job performance or their likelihood to commit fraud.”
  • Employees seeking management positions. Again, denying a management position to an employee with a less-than-stellar credit report unfairly burdens those minority populations who are more likely to have weaker credit scores, thereby limiting upward mobility in marginalized groups.
  • Employees seeking law enforcement and security positions. There is no empirical evidence to suggest that the results of a credit report are in any way related to the candidate’s ability to perform his or her job honestly and with integrity.

Status of Anti-Credit Check Laws in New York

In the New York state legislature, several credit check bills have made their way through the Assembly and Senate, however there are no current statutes to address the situation. The contents of one bill that passed the New York state assembly (but subsequently died in the Senate) made it unlawful for any employer to run a credit check on an employee unless otherwise required by law.

Likewise, the status of employee credit check restrictions in New York City has yet to be determined, however advocacy groups have fought to bring the issues to the forefront, highlighting the overt discriminatory nature of the practice, as well as the blatant breach of privacy and confidentiality inherent in reviewing a candidate’s credit history report.

Federal regulations, which of course apply to all states as well, say employers are permitted to run a credit check on potential employees, provided the employee is given notice of the impending credit inquiry during the hiring process.

Enduring Employment Discrimination? Contact Lynch Schwab Today!

At Lynch Schwab, our Westchester County employee discrimination  lawyers can help you overcome the inequities of employment discrimination, including discriminatory practices in the hiring phase. For more information about how our Westchester County law office can help, call (914) 304-4353. 

Posted on March 25, 2015 in Sexual Harassment and Discrimination