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Consumer Protection Publications

New York City Employers May Not Use Consumer Credit History In Making Employment decisions

Charles Pascal Cohen

People seeking employment in New York City have one less hurdle to overcome. With the recent amendment to the New York City Human Rights Law, the Stop Credit Discrimination in Employment Act (“SCDEA” or the "Act"), the vast majority of employers (with 4 or more employees) will no longer be allowed to make hiring decisions based on job seekers' consumer credit history. The City recognizes that using "credit history when making employment decisions is a practice that has a disproportionately negative effect on unemployed people, low income communities, communities of color, women, domestic violence survivors, families with children, divorced individuals, and those with student loans and/or medical bills." Additionally, the City noted that "multiple studies have failed to demonstrate any correlation between individuals’ credit history and their job performance."

The SCDEA, which went into effect on September 3, 2015:

[makes it] an unlawful discriminatory practice for employers, labor organizations, and employment agencies to request or use the consumer credit history of an applicant or employee for the purpose of making any employment decisions, including hiring, compensation, and other terms and conditions of employment. N.Y.C. Admin. Code §§ 8-102(29), 8-107(24). The SCDEA also makes it an unlawful discriminatory practice for a City agency to request or use, for licensing or permitting purposes, information contained in the consumer credit history of an applicant, licensee or permittee. Id. at § 8-107(9)(d)(1).

The Act defines “consumer credit history” as an individual’s “credit worthiness, credit standing, credit capacity, or payment history, as indicated by: (a) a consumer credit report; (b) credit score; or (c) information an employer obtains directly from the individual regarding: (1) details about credit accounts, including the individual’s number of credit accounts, late or missed payments, charged-off debts, items in collections, credit limit, prior credit report inquiries, or (2) bankruptcies, judgments or liens.” (See N.Y.C. Admin. Code § 8-102(29)).

Employers who violate the SCDEA may be sued for back and front pay, along with compensatory and punitive damages. Additionally, the New York City Commission on Human Rights will impose civil penalties up to $125,000 for violations, and up to $250,000 for violations that are the result of willful, wanton or malicious conduct.

See:  NYC Commission on Human Rights Legal Enforcement Guidance on the SCDEA.