On May 6, 2015, the Stop Credit Discrimination in Employment Act (the “Act”) was signed into law by Mayor Bill de Blasio. The Act goes into effect on September 3, 2015 and amends New York City’s Human Rights Law by prohibiting New York City employers from using credit reports/scores, bankruptcies and liens in making employment decisions. If an employer is found to have violated the law by using an applicant or employee’s consumer credit history in taking an adverse employment action, the employer could be liable for back pay, compensatory damages, punitive damages, attorneys’ fees and costs, reinstatement and/or other equitable relief.
There are exemptions included in the Act, which allow certain employers to use credit reports in employment decisions, such as law enforcement and other professions involving high levels of public trust or access to trade secret information, as well as for employers who conduct credit history checks pursuant to state and federal laws or regulations. These employers, however, must still comply with their obligations under the Fair Credit Reporting Act before utilizing a credit report.
It is anticipated that private employers may try to use the “trade secret” exception within the Act when requesting credit information in defense of claims. However, as many employers know, establishing information to be a protectable trade secret is a difficult task, as is often encountered in violation of a confidentiality agreement or misappropriation of trade secret claims.
What’s the fallout? Employers in New York City must carefully review their hiring forms and handbooks with experienced counsel to confirm the removal of references to credit checks and other language that may not fall into the Act’s exceptions.