A new law is set to go into effect in New York State on April 18, which will prohibit employers from using credit checks when making employment decisions except in limited circumstances. The law is meant to protect employees from being discriminated against due to their financial circumstances. As a result, many workers will now have an easier time getting a new job or a promotion, due to the elimination of this hurdle.
What is This Law About?
The new law prohibits employers from using employment credit checks when making decisions about their employment. This includes things like choosing whether to hire or fire someone, or whether to offer them a promotion. There are a handful of exceptions to this broad ban, including people seeking to become police officers, people who deal with sensitive trade or insider information, and people in financial roles handling portfolios over $10,000 in value.
What Are Employment Credit Checks?
Employment credit checks are a tool, regulated federally by the Fair Credit Reporting Act (FCRA), which allows employers to obtain credit reports on prospective or current employees. These reports are similar to those that might be sought when applying to a bank for a loan, or when trying to get an apartment. Among other things, it allows employers to view an employee’s credit score, their outstanding debts, their income, and whether or not they have declared bankruptcy in the recent past.
Why Were Employment Credit Checks Banned?
In theory, the purpose of these checks is to ensure an employee does not have substantial debts or other financial issues which might encourage them to engage in dishonest behavior, such as theft or embezzlement. In practice, however, these credit checks kept people from being able to escape poverty or debt by ensuring their past financial problems prohibited them from improving their circumstances. Prohibiting these checks in most circumstances will make it easier for employees who otherwise might struggle to obtain employment due to their financial issues.
How Could This Impact You?
If you are an employee who has struggled to get a better job or obtain a promotion, these credit checks may be part of the reason why. When this law goes into effect, you may find your circumstances significantly improved, now that these hurdles are not there to get in your way. You may also have legal options available to you if your employer inappropriately considers your credit report as part of their employment practices, and uses that information against you.
Steven Mitchell Sack, the Employee’s Lawyer, is a New York employment lawyer with more than 46 years’ experience handling the many aspects of employment law. His new book, “Fired!: Protect Your Rights & FIGHT BACK If You’re Terminated, Laid Off, Downsized, Restructured, Forced to Resign or Quit,” is available in hardback, and contains valuable advice on dealing with employment and labor law issues. To purchase the book, feel free to contact Steven Sack at 917-371-8000 or visit the website at legalstratpub.com. To inquire about a legal matter, please feel free to contact attorney Steven Sack at 917-371-8000 or stevensackatty@hotmail.com.
