Credit checks during hiring quashed by the NY City Council

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By: Phil Bradford
on 17th Jul,2015

Credit discrimination is a menace and NY City Council is doing its best to contain it.
Credit checks during hiring quashed by the NY City Council


Many employers would be barred from checking job-seeker's credit history due to a law enacted by the City Council in the recent past. Councilman Brad Lander (D-Brooklyn) has formulated the bill to make such an act illegal, discriminatory practice.

Laying of the groundwork for the bill

Pro-consumer advocates opined that employer credit checks hit people hard, especially borrowers who are behind on student loan payments, women and minorities. Project director at Staten Island Legal Service (a member of the NYC Coalition to Stop Credit Checks in Employment), Nancy Goldhill said that there are no evidences to support that credit checks would factor in an applicant's ability to succeed in the workplace. She further added that credit reports are notorious for being misleading, as they are often found to be wrought with multiple errors.

The pro-advocates

Instead of denying a job, bill supporters say that employees with bad credit require a job to repay their loans and in turn, improve their creditworthiness. Unfortunately, employers who run a check of their employees' credit scores further aggravate the misery these poor souls have to undergo, Ms Goldhill said. According to her, this keeps the cycle of poverty rolling. Supporting her sentiments is Councilwoman Debi Rose, a cosponsor of the bill, who said that credit checks prevent people from getting employed.

In a statement issued by Ms. Rose (D-North Shore) said, "It is time to remove artificial barriers that exclude countless numbers of New Yorkers from becoming gainfully employed”. To her, the time has come to open the doors to those who seek employment and not close on their face.

What the bill stands for

From 2012 survey, it was found that almost 34 percent of all participating employers were reported to have conducted credit checks on selected job applicants. On the other hand, around 13 percent of the survey respondents said that they do check credits of all their prospective employees.

Interestingly, the Council has included some exemptions into the newly enacted law like employers needing to check credit history before hiring, as necessitated either the state or the federal law.

Employers would also have the permission to check credits of applicants looking to join the police department and various other city workers who are already subjected to background checks by the Department of Investigation as well as financial disclosures under the Conflicts of Interest Board.

They are also permitted to check credit history of the applicants for jobs that calls for cyber security or fiduciary duties, in addition to those jobs where a candidate would have the autonomy to finalize financial deals valued at $10,000 or more.

Reaction of the City Council

The law passed 47 to 3, with Councilman Steven Matteo (R-Mid-Island) among those against.

The bill was enacted into law with a vote of 47 to 3, where Councilman Steven Matteo (R-Mid-Island) were amongst those who voted against the motion. As per his justifications, whether to run a check of a prospective employee's credit history or not during the hiring process should not be decided by the government, even though the motive of the bill is a bona-fide one.

However, Minority Leader Vincent Ignizio (R-South Shore) said that the law is “pro-work” before voting in favor of the bill. To extend his support, Ignizio further added shared that lawmakers should encourage business entities to extend a helping hand to the employees who want to prove their skill set and must not be discriminated against on the basis of a potential adverse financial data that could have happened several years ago.

Ishanee Parikh, spokeswoman of de Blasio said that credit discrimination acts as a hurdle for New Yorkers to seek employment and that they pledge to continue the good work of helping more people to join the workforce in cooperation with the City Council.

Know why employers conduct credit checks.

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