New York City became the latest place to limit se of credit checks as a screening tool for job applicants on Wednesday when Mayor Bill de Blasio signed the “Stop Credit Discrimination in Employment Act.” The bans most employers from using job applicants’ credit history in hiring decisions.
By some measures, roughly half of employers perform credit checks on prospective employees and can disqualify applicants for seemingly unrelated credit problems, such as unpaid medical bills. The NYC law bans the practice, with exceptions for law enforcement and financial services firms.
Consumer advocates cheered the law.
“After recovering from a serious injury that saddled me with over $50,000 of medical debt, I began applying for jobs and quickly realized that something was different. I suddenly wasn’t good enough to hire. It wasn’t that employers weren’t interested in me. In fact, during interviews, I received lots of encouragement and praise from employers, who said I was management material or a great fit for the job. It was only after they checked my credit that I suddenly wasn’t good enough,” said Alfred Carpenter, member of the NYC Coalition to Stop Credit Checks in Employment,which lobbied for the law. ”This law makes New York a better place to live and work. I applaud the Mayor and the City Council for taking action to remove this unfair, discriminatory barrier to employment.”
According to the National Conference of State Legislatures, 11 states currently limit the practice, and more bans are being considered.
“Our campaign to ban the use of credit checks in employment has been guided by the simple understanding that a person’s credit history has no bearing on their ability to do a job or their propensity to commit fraud,” said Armando Chapelliquen, campaign organizer with the New York Public Interest Research Group, an advocacy group. “(We have) seen too many students, whether from crippling student loan debt or other life situations, stuck in a credit ‘catch-22’. By signing this legislation, the City is removing an unjust barrier for hardworking students looking to start off their careers.”
The law takes effect in 120 days.
“This vital civil rights law will remove a major barrier to employment opportunity for lower-income New Yorkers,” said Sarah Ludwig, Co-Director of New Economy Project, which also lobbied for the project. ”Credit reports reflect already-existing inequities in our credit system and in our economy. Using them in the employment context unjustly blocks qualified New Yorkers, particularly people of color, from much-needed jobs.”
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