Employee Credit Checks Illegal In NYC Starting Sept. 2015

When making important hiring decisions, especially for high or big risk positions, employers resorted to employee credit checks and background check information in order to be assured they had a candidate with integrity filling the position.   Most security breaches of an information technology persuasion are inside jobs so credit checks were the best way to gauge whether or not an employee was a risk for theft or selling sensitive information, such as credit cards, for personal gain. In this information age, things that were never considered before are now big issues and can damage companies very easily.  

Mayor di Blasio Puts The Kibosh On Employee Credit Checks As Of September 2015

  For many employers, the new law signed by NYC Mayor Bill di Blasio means more risk for them and less assurances prior to hiring. Even though credit checks are no guarantee against an employee doing what could negatively impact the company, monetarily and otherwise, it still gave some insight into behavior expectations and alleged propensity to shirk responsibilities.   Some employers didn’t even need to run the actual employee credit checks. What they more or less wanted to see on the application is whether or not a potential employee would tell the truth about their credit history in the first place. Now, they can’t even ask.   This raises important questions as to what you will be able to use to gauge risk in the future. New York City is not alone: California, Chicago, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington are states that have already enacted similar laws in an effort to protect a potential employee from being either fairly or unfairly rejected based on their credit history. In some states, such as Massachusetts, you are no longer able to ask a potential employee if they have a felony conviction.  

Positions That Are Exempt From This Law

  There are positions that are excluded from the new law. Most of them pertain to those positions that are interacting with financial, personal, private or sensitive data. Any position that has access to this kind of information will still face credit and background checks:  

• Those who interact with consumer data -especially credit card and social security information
• Any position with oversight over assets exceeding $10,000 in value
• Roles that require a security clearance by the government or for national security
• Anyone who has access to trade secrets, such as patent or inside company information
• An IT Position of any kind that has the ability to gain access to or manipulate network, database or other digital security systems.

 

What To Do If You Are Currently Performing Employee Credit Checks In New York City

  First and foremost, as of September 3rd, 2015, you must cease any employee credit checks that fall outside of the exemption list, current, potential and otherwise. If you are not sure, be sure and look into it before you are held unwittingly liable for performing an illegal credit check.   Employers who continue to perform employee credit checks after the enactment date can and will be responsible for not only back pay and future pay as a result of a credit check on a potential employee or one that causes the termination of an existing employee due to a new credit check, but also emotional damages as well. Bottom line, it is not worth the risk.   A word to the wise; no matter what position you are hiring for, exempt or not, it is never legal to perform any credit check on any employee, potential or otherwise, without their prior knowledge. Obtaining credit information without the individual’s express permission is punishable by law.  

How PEOs Help With HR Laws Today And In The Future

  If you are reading about this law for the first time it may be a little alarming. How do you protect yourself against doing something illegal just because you were unaware of new laws coming into effect or what their nuances are? A PEO’s job in working for you is to know this information ahead of time and manage its implementation with you. In short, it is peace of mind with HR law.   A reputable PEO navigates HR and Tax law so you don’t have to. Need help, advice or insight into how a PEO can help you? PEO Brokers like PEO Spectrum help you understand which PEOs are right for your business, driving down the cost of PEO acquisition and significantly shortening the amount of time it takes to research and select the right one.