United States: The New York City Commission On Human Rights Releases Enforcement Guidance On The Stop Credit Discrimination In Employment Act

Last week, the Stop Credit Discrimination in Employment Act became effective.  It amended the New York City Human Rights Law to prohibit most employers from making employment decisions based on an employee or applicant's consumer credit history.  You can read the specifics here.  The NYC Commission on Human Rights has now released enforcement guidance detailing its interpretation of this new law.  Our immediate takeaway: employers should attempt to utilize the law's exemptions sparingly, and when they do, they should document it sufficiently.  We breakdown the guidance below.

The Commission Interprets the SCDEA Broadly

From the outset, the Commission makes it clear that it is required to interpret the law broadly, because (i) the City Council wanted the SCDEA to be the strongest anti-credit discrimination law in the nation, and (ii) the Human Right Law requires that its provisions be construed liberally.  In all: the Commission takes the view, consistent with City Council findings, that consumer credit history should not factor into employment decisions related to most positions in the City.

Thus, Not Surprisingly, the Commission Interprets the SCDEA's Exemptions Narrowly

The Commission stated that employers should construe the SCDEA's exemptions narrowly, and that the burden rests with the employer to prove by a preponderance of the evidence the exemption's application.  We focus on four of the SCDEA's exemptions below.

  1. Positions where state or federal law or regulations or where the regulations of a self-regulatory organization require the employer to use consumer credit history for employment purposes

The Commission confirmed that the SCDEA does not apply to individuals required to register with FINRA.  This does not mean however, that employers who are FINRA members are wholly exempted as many of their employees may not be required to register with FINRA.  The Commission further noted that, to its knowledge, the only New York State law that would satisfy this exemption related to licensed mortgage loan originators.

  1. Non-clerical positions having regular access to trade secrets

The Commission stated that "trade secrets" does not include regular access to information such as "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 or such employees.  In other words, think twice before applying this exemption even if the individual will have access to certain sensitive information.

  1. Positions involving responsibility for funds or assets worth $10,000 or more

The Commission stated that this exemption only applies to executive-level positions with financial control over the Company, including but not limited to, CFOs and COOs, and it does not include all staff in the finance department.

  1. Positions involving digital security systems

Likewise, this exemption, the Commission said, only applies to executive-level positions, such as a CTO, or other information technology executives who control access to all parts of a company's computer system.  It does not include any person who may access a computer system or network available to employees, or all staff in an IT department.

The Commission Wants You to Document any Claimed Exemption

Although not required by the SCDEA, the Commission is advising employers to inform the applicant or employee any time it seeks to apply an exemption.  The Commission also wants employers to create and maintain an exemption log that identifies the following information:

  1. The claimed exemption;
  2. Why the claimed exemption covers the exempted position;
  3. The name and contact information of all applicants or employees considered for the exempted position;
  4. The job duties of the exempted position;
  5. The qualifications necessary to perform the exempted position;
  6. A copy of the applicant's or employee's credit history that was obtained pursuant to the claimed exemption;
  7. How the credit history was obtained; and
  8. How the credit history led to the employment action.

The Commission says an entry should remain on the log for at least five years, and that it may require employers to share their exemption log with the Commission upon request.  Again, while this is not statutorily-required, the Commission kindly notes that following this guidance could help an employer "avoid a Commission-initiated investigation into employment practices."

A Violation May Occur Even Without an Adverse Employment Action

The Commission made it clear that employers may violate the law simply by requesting consumer credit history even if they don't otherwise act on it.  The Commission said that liability will ensue from such a request, and the question over whether it led to any adverse employment action (i.e. a rejection of the applicant) would only factor into any damage or penalty determination.  Further, the Commission did make it clear that a credit history request does not preclude an employer from researching a candidate or employee's background or experience, evaluating their resume and references and conducting online searches (e.g., via Google or LinkedIn).

The Commission Says it Will Take Violations Seriously

Consistent with the NYC Human Rights Law's penalty provision, the Commission stated that it "will impose" civil penalties of up to $125,000 for violations, or up to $250,000 where those violations are the result of willful, wanton or malicious conduct.  It said that the ultimately penalty amount would be determined based upon several factors, including (i) the severity of the violation; (ii) the existence of subsequent violations; (iii) the employer's size, considering both the total number of employees and its revenue; and (iv) the employer's actual or constructive knowledge of the SCDEA.  Of course, other damages are available as well, including back and front pay and compensatory and punitive damages.

Takeaways

The Stop Credit Discrimination in Employment Act is the result of a City Council finding that consumer credit history is rarely relevant when making an employment decision, and therefore, employers should be restricted from requesting such information except in very limited circumstances.  The Commission has also adopted this view in its enforcement guidance.  Thus, now that the law is in effect, City employers should be careful before making a credit history request for job applicants and current employees.  They should closely examine whether the individual can meet one of the exemptions and if they decide to apply the exemption, they should strongly consider following the Commissions documentation guidelines.  Employers should also remain aware of the separate disclosure and authorization requirements under the New York State and Federal Fair Credit Reports Acts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Michael S. Arnold
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.