On May 7, 2015, New York City Mayor Bill de Blasio signed a law that prohibits businesses from taking any employment-related action against an individual based on credit information. The law takes effect on September 7, 2015 but preparations should begin now.

The law makes it illegal to request or use for employment-related purposes the credit report of any applicant or employee. It expressly prohibits using such credit information in connection with hiring, compensation, or terms and conditions of employment.

The credit information covered by the amendment includes consumer credit reports, credit score or details obtained from the individual regarding their credit accounts including the number of credit accounts, late or missed payments, items in collection, credit limits, prior credit report inquiries, as well as bankruptcies, judgments or liens.

There are also some limited exceptions, such as:

• non-clerical positions requiring access to trade secrets, intelligence information or national security information;
• employees with (i) signatory authority over third party funds or assets valued at $10,000 or more; or (ii) fiduciary responsibility with authority to enter financial agreements valued at $10,000 or more;
• positions required to possess security clearance; or
• positions which regular duties involve modifying digital security systems protecting the employer's or client's networks or databases.

Employers subject to the New York City Human Rights Law should first evaluate whether their company as a whole or specific positions are excluded from coverage of this new law. If no exclusion applies, affirmative steps should be taken to ensure that their written and non-written policies do not run afoul of this new law.

Best Practices for Compliance with the New Law:

• Modify job applications and related documents that seek permission to run a credit check.
• Ensure that future postings do not reference credit history.
• Instruct all individuals conducting interviews to refrain from asking any credit-related questions during the application process.
• Review and edit all employee handbooks, manuals and intra-company written materials to ensure that applicants are not asked to disclose any credit-related information in connection with their candidacy.
• Instruct management that credit-related information is not to be considered or used in any way when making decisions involving hiring, firing, disciplining or compensating employees.

For more information, please contact Laurent S. Drogin or Richard L. Steer.