Prohibits the use of job applicant's personal credit history as hiring criteria, unless a reasonable nexus exists

1 Co-sponsor

• Liz Krueger

BILL NUMBER:S5181

Title of bill

An act to amend the executive law, in relation to prohibiting discrimination in hiring based on credit scores

Purpose

This legislation would prohibit the use of a job applicant's personal credit history as hiring criteria, unless a reasonable nexus exists.

Summary of provisions

Section 1. Section 296 of the executive law is amended by adding a new subdivision 19-a. This section prohibits the use of credit scores as hiring criteria for employers, unless this information is directly related to the occupational position sought by the applicant or employee. If an employee consents to a credit history background check, he or she must be given and sign an authorization or consent form which explicitly states the specific purpose, uses and limitations of the credit history background information as it pertains to the employment position sought.

Justification

During difficult economic times, individuals seeking employment deserve to be evaluated on their ability to perform the duties of the position for which they apply. In order to narrow applicant pools, employers are using an applicant's credit score to evaluate their ability to perform a job, regardless of relevance to the position.

Many applicants, who are otherwise well-qualified for the position sought and who would make good employees, are rejected due to their credit score. This legislation would eliminate this bias by restricting an employer's ability to use credit information, unless credit history is shown to be directly related to the occupational position being pursued by the applicant or employee.

While there are certain positions that require credit checks (i.e. positions that involve access or the direct access of handling money or negotiable instruments, positions that involve investigating possible violations of law or state agency rule), employers must be able to justify their reasons for requiring this information and how it directly relates to the position. Since many employers require job applicants to waive their right to privacy, applicants have no other choice than to submit to a credit history inquiry.

There are many factors that can adversely affect a person's credit score without their knowledge. For instance, if too many inquiries are made for an individual's credit report, his credit rating can be negatively affected. An individual's credit history may also be lowered if her spouse had a poor credit rating before they were married or if he had his credit limit reduced due to inactivity. These adverse actions taken by credit card companies can ultimately hurt an individual's opportunity to gain employment when companies use credit histories to screen applicants.

Legislative history

New bill.

Fiscal implications

None.

Effective date

This act shall take effect immediately.