A new state law took effect over the weekend barring most employers from using an individual’s credit history when making decisions on hiring, pay or promotions.
“It's a positive thing for employees and job seekers, so that they're not judged on their financial circumstances,” said Cecilia Oyediran, senior outreach associate with the labor and employment law program at Cornell University. “But rather more focused on their actual job-related qualifications.”
New York joins nearly a dozen states banning employers from accessing or asking about a job seeker’s debts, late payments, collections, bankruptcies and judgements.
New York City passed similar restrictions a decade ago.
There are exceptions, including peace officers and federally-regulated jobs in the financial sector.
Using credit histories disproportionately affects people of color, Oyediran said, because of systemic inequalities that exist in society.
“Sometimes employers didn't even necessarily ask for that specifically from the background check agencies," she said. “But it's provided, you know, sort of in this modified report, and so they have access to this information, and would then make decisions based on that"
New York’s law also covers employment agencies and labor organizations.
Job applicants should read the fine print when employers seek written permission for background checks to ensure credit history is not part of the search, she said. Employers can face financial penalties if caught violating the new law.
