The New York City Council passed legislation which will ban most employers from using peoples’ credit history in hiring decisions. According to the bill’s sponsor, Brad Lander, “Millions of Americans who have bad credit would also be great employees”. The legislation claims that credit checks for employees are discriminatory, and that job-seekers with bad credit who need a job to repair their credit shouldn’t be prevented from doing so.
The legislation is heading to the mayor’s office and Lander is “optimistic” about getting a signature. If the mayor signs off on the ruling it will go into effect 120 days from now. However, you may not be in the clear after the law is in place: employers can still run credit checks for “jobs of public trust”. This includes positions such as police officers and high-level city workers. Checks can also be done for positions that involve cyber security risks or where there are fiduciary duties to the employer. In addition, state and federal laws still require background checks for positions like mortgage bankers.
Currently, around half of all employers run credit background checks on potential employees, according to the Society of Human Resource Management. Federal law requires employers to get permission from job candidates to get a background report, which can include a credit check. In addition to NYC, many other states and cities have passed or are trying to pass similar laws, including Nevada, California, and Maryland. View a full list of legislation on credit checks.