New York City Issues Guidance on Credit Restrictions

By Michael Klazema on 9/11/2015

The Act amends the New York City Human Rights Law by making it an unlawful discriminatory practice for 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.  It prohibits employers from requesting or using information about an individual’s credit worthiness, credit standing, credit capacity, or payment history as indicated by a consumer credit report, credit score, or information an employer obtains directly from the individual regarding details about credit accounts or bankruptcies, judgments, or liens.

The City’s enforcement guidance identifies the limitations that will be applied to the exemptions listed in the Act. The limited exemptions are:

  1. Employers required by state or federal law or regulation or by the Financial Industry Regulatory Authority (FINRA). The guidance says that the only state law requiring a credit check applies to licensed mortgage loan originators and individuals who are required to register with FINRA.
  2. Police officers, peace officers, or positions with a law enforcement or investigative function at the Department of Investigation. The Department of Investigation exemption does not apply to the many positions that do not serve investigative functions.
  3. Positions subject to a Department of Investigation background investigation. The exemption applies only to individuals who are appointed to the position and the position requires a high degree of public trust. The guidance lists the specific positions.
  4. Position requiring bonding under federal, state, or city law or regulation. For the exemption to apply to these positions, the bonding must be legally required, not simply permitted by statute.
  5. Positions requiring security clearance under federal or state law. This exception only applies to when the review of consumer credit history will be done by the federal or state government as part of evaluating a person for security clearance, and that the security clearance is legally required for the person to fulfill the job duties. A security clearance means only the type of clearance that allows access to national security classified information.
  6. Non-clerical positions having regular access to trade secrets, intelligence information, or national security information. “General proprietary company information such as handbooks and policies” and “access to or the use of client, customer, or mailing lists” do not qualify as trade secrets. “Trade secrets” do not include recipes, formulas, customer lists, processes, and other information regularly collected in the course of business or regularly used by entry-level and non-salaried employees and supervisors or managers of those employees.
  7. Positions involving responsibility for funds or assets worth $10,000 or more. Generally, the exclusion includes only executive-level positions with financial control over a company. It does not include all staff in a finance department.
  8. Positions involving digital security systems. This exemption applies to positions at the executive level. It does not apply to all staff in an information technology department.

The guidance recommends that, whenever an employer claims an exemption, it informs the applicant or employee of the claimed exemption. It also recommends that each employer should keep a record of its use of exemptions for a five-year period from the date an exemption is used. Employers will be required to share their exemption logs with the Commission upon request. The log should contain the following:

  • The claimed exemption;
  • Why the claimed exemption covers the exempted position;
  • The name and contact information of all applicants or employees considered for the exempted position;
  • The job duties of the exempted position;
  • The qualifications necessary to perform the exempted position;
  • A copy of the applicant’s or employee’s credit history that was obtained pursuant to the claimed exemption;
  • How the credit history was obtained, and
  • How credit history led to the employment action.

It is important to note that a violation of the Act occurs even if an employer’s practices do not lead to an adverse employment action.  Based on the Act’s provisions and the limited exceptions, there are very few circumstances when an employer may lawfully access or use credit history information for employment purposes.

Penalties for violating the New York City Human Rights Laws are substantial. Employers may have to pay lost wages and other damages and may be subject to civil penalties of up to $125,000. A willful violation may be subject to civil penalties of up to $250,000.

The legal enforcement guidance is found on the New York City Commission on Human Rights website:

You can view the New York City ordinance #261-A at

You can review’s compliance update “Mayor de Blasio Approves Restrictions on Employer Use of Credit History” at

What This Means for You:

  • Determine whether you have positions in New York City for which you run credit checks.
  • If so, determine whether one of the exemptions in the law applies to you.
  • If not, either consider how to log the information needed to show compliance or contact your account manager to talk about setting up background screening packages without credit checks for New York City positions.

Tag Cloud
Recent Posts

Latest News

  • March 22 Countrywide, states and local municipalities have committed to ban the box legislation, seeking to equalize opportunities in the job market for those with criminal histories.
  • March 22

    Thinking about becoming a firefighter? Here are some of the background check requirements you might face.

  • March 20

    Four Department of Commerce employees are out after their background checks resulted in security clearance denials. All four had worked high-ranking positions for months despite incomplete background checks.

  • March 15 As more states legalize the recreational use of cannabis, they contend with the emergence of new industries surrounding marijuana cultivation and production. 
  • March 14 In most cases, it is easy to determine where an issue might show up on a pre-employment background check. Citations for traffic violations or reckless driving charges will appear on a motor vehicle record check. Verdicts in a civil court case will show on a civil court background check. And criminal convictions—from petty theft to violent felonies—show up on criminal background checks.
  • March 13 How many years back do employment background checks go? This question can have multiple different answers depending on the situation.
  • March 13 A new bill in Florida would require landlords of apartment complexes to present tenants with verifications of employee background checks to give them peace of mind the people working in and around their homes are trustworthy.
  • March 08 Police officers working with the University of Texas at Arlington recently arrested a man who had avoided police capture on a warrant out of Oregon for nearly two decades. The man, whose real name is Daniel Charles Ray Hanson, spent those 17 years using a variety of fake names and identification documents to move around the country, often engaging with educational institutions under false pretenses. Police say Hanson regularly went by at least three different aliases. He sports a rap sheet that stretches back to an arson conviction in 1995. 
  • March 07

    The Future of EEOC Guidance in Texas Is Up in the Air

    The EEOC issued guidance in 2012 warning employers about the dangers of enforcing categorical policies to bar candidates with criminal histories. That guidance is not enforceable in Texas thanks to a recent court ruling.

  • March 05 Vermont is the latest state to restrict employers’ access to and use of social media accounts of employees and applicants.