With the New York City “Stop Credit Discrimination in Employment Act” now in effect (as of September 3, 2015), the City Commission has just released guidelines for some ambiguous points in the law. We first wrote about the Act in a post in April when New York City became the twelfth jurisdiction in the country to bar the use of credit background checks in hiring and employment decisions.

The guidelines make it clear that employers who plan to rely on one of the Act’s exemptions and do credit checks should proceed very, very carefully, and keep very good records.

The law prohibits employers from requesting and using consumer credit histories for any job applicants or employees. It contains a number of exemptions, some of which were clear and some of which were not.

The Commission has now clarified some of the exemptions and issued some FAQs. What these clarifications show is that the exemptions should be construed narrowly, and should generally NOT be applied to clerical or lower-level employees, but limited to executive level staff.

Below are some of the exemptions, as clarified by the Commission:

  • “Positions for which employers are required by law, regulation, or a self-regulatory organization to use an individual’s consumer credit history for employment purposes.”
    • Applies only to FINRA members with respect to employment decisions about people required to register with FINRA.
  • “Non-clerical positions that entail regular access to trade secrets; “
    • Trade secrets do not include general propriety information such as handbooks/policies, recipes, formulas, customer lists, processed and other information regularly collected in the course of business or regularly used by entry-level and non-salaried employees and supervisor or managers of such employees.
  • “Positions with responsibility for funds or assets valued at $10,000 or more.”
    • Limited to executive-level positions with overall financial control of the company such as CFOs and COOs, but does not apply to all staff in a finance department.
  • “Positions with regular duties that allow the employee to modify digital security systems established to prevent the unauthorized use of networks or databases of the employer or the employer’s client.”
    • Limited to executive-level positions with control over access to all parts of the company’s computer systems, such as a CTO or a senior IT executive, but does not apply to all individuals who may have access to a computer system or network or even all staff in an IT department.

In the FAQs, the Commission states (not surprisingly) that the exemptions do not cover most low-level employees, like tellers, cashiers, salespeople, clerical workers, administrative staff, restaurant/bar workers, and private security employees.

Employers should keep in mind that if they are claiming an exemption, they will be required to prove that the exemption applies.  The law also requires them to inform the applicant or employee of the claimed exemption and keep records of all exemptions utilized for five years.

There are serious penalties for violations of the law (up to $250,000 for willful, wanton, or malicious violations, and up to $125,000 for other violations) in addition to other remedies available under the NYC Human Rights law.


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