What Is Credit Discrimination in Employment?

In New York City, a new law that went into effect on September 3, 2015, prohibits employers, labor organizations and employment agencies from discriminating against applicants based on their credit history.

The NY City Council passed the Stop Credit Discrimination in Employment Act (SCDEA) because for most employment positions, an individual’s credit report or credit history is not relevant to the job qualifications. Asking for such information tends to have a negative impact on unemployed people, low income groups, individuals of color, women, domestic violence survivors, families with children, divorced individuals and people with student loan or medical bills. Multiple studies corroborate that there is no relevance between job performance and credit histories.

What does this mean exactly for employers?

Under the SCDEA, consumer credit history refers to the person’s credit standing or payment history which is reflected by the following:

  • A consumer credit report
  • Credit score
  • Information obtained from the individual by asking about credit accounts, late or missed payments, charged-off debts, items in collections, credit limits, prior credit report inquiries, bankruptcies, judgments or liens

Employers cannot directly or indirectly request information as listed above, orally or in writing from job applicants, current or potential employees.

There are certain jobs that are exceptions to the SCDEA based on the nature of the work role. Examples are police or peace officers and also employees or job applicants required by FINRA to have credit checks.

As an employer, it is vital to be well-informed regarding employment laws. Stephen Hans is glad to answer your questions and represents employers in discrimination, employment issues and labor disputes involving regulatory actions.