Rights & Liberties

New York City to Ban Credit Checks in Hiring

In New York City, prospective dog-walkers, delivery drivers, and even home care aides have sometimes undergone credit checks before they are deemed eligible for hire.

The New York City Council has voted overwhelmingly to put an end to this. In a vote of 47-3 last week, the Council passed a law banning most employers from using credit checks in making hiring decisions, a practice that has trapped many New Yorkers in a “catch-22” with bad credit and no way of finding employment.

Investigative Fund reporting fellow Gary Rivlin wrote in 2013, “People tend to think of banks and other lenders as the main users of credit reports. But over the last several decades, credit reporting bureaus have been selling their services to a much wider range of buyers.”

Councilman Brad Lander, who sponsored the bill, cited a 2012 study by the Society for Human Resource Management that found that 47 percent of employers use credit checks in making hiring decisions. And in 2013, Demos researchers found that “one in seven of all respondents who have poor credit say they've been told they would not be hired for a job because of the information in their credit report.” The practice is far from limited to management-level positions. The NYC Coalition to Stop Credit Checks in Employment, a group of 79 community organizations and labor unions that pushed for the bill, posts the testimony of numerous low-level job applicants on their website. There's Alfred, who was denied a job in several stores due to hospital bills that piled up while he was unemployed. And there's Lisa, a student who couldn't get a job after leaving a for-profit college with huge loans that marred her credit.

New York City will now join 11 other jurisdictions around the country putting an end to this practice. The bill, known as the “Stop Credit Discrimination in Employment Act” is one of the strongest. It will, however, include numerous exemptions, some of which are the result of concerns coming from an unexpected corner in the debate: the de Blasio administration. Police and peace officers, some city government employees, and professionals dealing with national security may still undergo credit background checks according to the final draft of the bill.

The Partnership for New York City, a business group, fought unsuccessfully for a blanket exemption for financial institutions, as Connecticut and several other jurisdictions have granted in their versions of the law. Short of PfNYC's request, the final draft of the bill exempts positions with fiduciary responsibilities granting access to assets above $10,000.

Ending credit background checks in employment is “a matter of racial and economic justice” the New Economy Project said in a statement after the vote. The mayor is expected to sign the bill, putting it into effect 120 days later.

About the reporter

Abbie Nehring

Abbie Nehring

Abbie Nehring is a former research assistant and intern at the Investigative Fund.

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