On September 3, 2015, a new law went into effect prohibiting many private sector employers in New York City from requesting or using an employee’s or applicant’s consumer credit history. Unless one of the limited exception applies, employers may not ask employees or applicants about their credit status, bankruptcies, judgments or liens, and using any consumer credit history information. Additionally, as of October 27, 2015, New York City will regulate employers’ use of criminal history for pre-employment screening.
Both of these changes in the law will require most employers operating in New York City to revise their initial employment application forms to eliminate credit history or criminal history questions from such forms and to re-evaluate when and how they seek such information, if at all. In this regard, New York City joins a host of other jurisdictions that have been active in regulating the pre-employment use of credit or criminal history, including California, Connecticut, Hawaii, Illinois, and a host of cities through out the U.S.
Failure to follow these restrictions can be costly. Lawsuits filed by the EEOC alleging violations of the Fair Credit Reporting Act (FCRA) relating to background checks, have resulted in significant settlements including a $3 million settlement announced recently involving a major supermarket chain, as well as a $1.75 million settlement, covering approximately 30,000 individuals, involving a popular restaurant chain.
For more information. please see the article entitled “Criminal Background Checks: Damned If You Do, Damned If You Don’t” (Parts I and II) in WFCA’s Premier Flooring Retailer (March/April and May/June 2014).