Employers in New York City Cannot Request Your Credit Report

In order to have a claim for wrongful termination in New York, individuals and/or employees must have been discriminated based on one of the protected classes under the New York State or New York City Human Rights Laws.  The protected classes include, but are not limited to:  age, race, color, religion/creed, national origin, gender, disability, and pregnancy.  However, effective September 3, 2015, wrongful termination claims in New York City include claims based on an individual’s credit report or history.  The “Stop Credit Discrimination in Employment Act” (“SCDEA”) prohibits 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.  In addition to the other remedies – back and front pay, and compensatory and punitive damages – available to individuals who successfully prevail on claims under the New York City Human Rights Law (“NYCHRL”), the SCDEA imposes civil penalties up to $250,000 for violations that are the result of willful, wanton or malicious conduct.  The amount of the civil penalty depends on the severity of the violation, the existence of subsequent violations, the employer’s size (both revenue and the number of employees), and the employer’s actual or constructive knowledge of the SCDEA.

The use of credit reports for employment purposes has had 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.”  However, studies have shown that there is no correlation between an individual’s credit history and their job performance.  The SCDEA makes the following acts by an employer a violation of the NYCHRL and potential wrongful termination:  requesting consumer credit history from job applicants or potential or current employees, either orally or in writing; requesting or obtaining consumer credit history of a job applicant or potential or current employee from a consumer reporting agency; and using consumer credit history in an employment decision or when considering an employment action.  An employer has violated the NYCHRL even if your credit history does not lead to any adverse employment action (i.e., being terminated).  However, any adverse action taken will be considered when determining damages or penalties.  The SCDEA does provide a list of position where employers may obtain that individual’s credit report, however, these exemptions are construed narrowly and the employer bears the burden of proof that the individual falls within one of the eight categories.  Examples of positions that may be “exempt” are:  positions that are required to register with the Financial Industry Regulatory Authority (“FINRA”); police officers, peace officers, or positions with a law enforcement or investigative function at the Department of Investigation; and certain positions with the City of New York.

The employment lawyers at Fitapelli & Schaffer, LLP are strongly committed to protecting the rights of hard working employees.  If you feel you were subject to wrongful termination in New York, please call us at (212) 300-0375 to schedule a free consultation.  You can also visit our website (www.fslawfirm.com).