A lot of people have gone through a period where they were seriously in debt and maybe even filed for bankruptcy. That means their credit score took a hit, and their credit report may still show some negative activity.
In most cases, a less-than-impressive credit history is irrelevant to a person’s ability to do a particular job, and if they are trustworthy. Unfortunately, that hasn’t always stopped potential employers from checking their credit history with a consumer reporting agency or obtaining their credit score before deciding whether to hire them. Even current employers may sometimes do that if an employee is seeking a promotion or just a different position.
Expansion of New York City’s law
As of April 18, New York state law prohibits employers, with some exceptions, from using a person’s credit history to make employment decisions such as hiring, compensation, promotion and firing. The change is actually an amendment to the New York State Fair Credit Reporting Act. It’s a statewide expansion of a law that’s been in place in New York City for over a decade.
The change makes New York the 11th state to enact such a law. Washington, D.C., and several large cities in addition to NYC have similar prohibitions.
The law makes using a person’s credit history a form of discrimination. That means people can potentially take legal action if they’ve been the victim of it. The law applies to any employee who lives in New York, even if their employer is based in another state.
Exceptions to the law
The exceptions to the law involve jobs that require a security clearance (like law enforcement positions), financial authority, or access to a company’s trade secrets as well as positions where obtaining consumer credit history is required by law.
Exceptions can also be made based on individual job responsibilities. However, employers need to be very careful to ensure that they aren’t checking the credit histories of only some of the applicants for a position. This can be a serious form of discrimination in itself.
Since the law is so new, some employers may fail to follow it – either intentionally or unintentionally. It can be difficult, if not impossible, for a person to know why they didn’t get a job or a promotion if the employer doesn’t acknowledge the true reason. However, those with questions or concerns about whether their credit history was wrongfully used to discriminate against them can benefit from getting experienced legal guidance.