NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A4052
SPONSOR: Jeffries (MS) TITLE OF BILL: An act to amend the executive law, in relation to
prohibiting discrimination in hiring based on credit scores
PURPOSE OR GENERAL IDEA OF BILL: To prohibit the use of a job appli-
cant's personal credit history as hiring criteria, unless a reasonable
nexus exists.
SUMMARY OF SPECIFIC PROVISIONS: Section 1. Section 296 of the execu-
tive law is amended by adding a new subdivision 19-a. This section
prohibits the use of credit scores as hiring criteria for employers,
unless this information is directly related to the occupational position
sought by the applicant or employee. If an employee consents to a credit
history background check, he or she must be given and sign an authori-
zation or consent form which explicitly states the specific purpose,
uses and limitations of the credit history background information as it
pertains to the employment position sought.
JUSTIFICATION: During difficult economic times, individuals seeking
employment deserve to be evaluated on their ability to perform the
duties of the position for which they apply. In order to narrow appli-
cant pools, employers are using an applicant's credit score to evaluate
their ability to perform a job, regardless of relevance to the position.
Many applicants, who are otherwise well-qualified for the position
sought and who would make good employees, are rejected due to their
credit score. This legislation would eliminate this bias by restricting
an employer's ability to use credit information, unless credit history
is shown to be directly related to the occupational position being
pursued by the applicant or employee.
According to the Society for Human Resource Management and security
consultant Kroll, about 43% of U.S. employers check job applicant's
credit scores. This figure has risen from 34% in 2004. These employers
routinely do their background checks without showing there is any
connection to the job. Employers claim that they check credit histories
prior to offering a job or promotion to find out if an individual's debt
load is too high for the salary that they are being offered. While there
are certain positions that require credit checks (i.e. positions that
involve access or the direct access of handling money or negotiable
instruments, positions that involve investigating possible violations of
law or state agency rule), employers must be able to justify their
reasons for requiring this information and how it directly relates to
the position. Since many employers require job applicants to waive their
right to privacy, applicants have no other choice than to submit to a
credit history inquiry.
There are many factors that can adversely affect a person's credit score
without their knowledge. For instance, if too many inquiries are made
for an individual's credit report, his credit rating can be negatively
affected. An individual's credit history may also be lowered if her
spouse had a poor credit rating before they were married or if he had
his credit limit reduced due to inactivity. These adverse actions taken
by credit card companies can ultimately hurt an individual's opportunity
to gain employment when companies use credit histories to screen appli-
cants.
Two articles in USA Today {"5 states challenge employer credit checks"
(02/13/2009) and "When 'bad' credit stands in the way of a good job"
(02/17/2009)} highlighted the negative impact that credit checks have on
people seeking employment. Through their investigation, they found that
the Transportation Security Administration (TSA) bars people with $5,000
in overdue debt or any federal or state tax lien from working as airport
screeners. This method has ruled out 22% of applicants from 2005 to
2007. The checks that the TSA and other companies conduct have raised
the question of inadvertent discrimination as 48% of African-Americans
have "bad" credit records in comparison to 34% for Hispanics and 27% for
Caucasians.
PRIOR LEGISLATIVE HISTORY: 2009-2010 (A.2067/S.2837) Referred to
Governmental Operations 2006-2007 (A.6328)
FISCAL IMPLICATIONS: None
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
4052
2011-2012 Regular Sessions
IN ASSEMBLY
February 1, 2011
___________
Introduced by M. of A. JEFFRIES, KOLB, KAVANAGH, BENEDETTO, SPANO,
GABRYSZAK, PEOPLES-STOKES, SCARBOROUGH, CRESPO, HOOPER -- Multi-Spon-
sored by -- M. of A. CALHOUN, CROUCH -- read once and referred to the
Committee on Governmental Operations
AN ACT to amend the executive law, in relation to prohibiting discrimi-
nation in hiring based on credit scores
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 296 of the executive law is amended by adding a new
2 subdivision 19-a to read as follows:
3 19-a. (a) Except as provided in paragraph (b) of this subdivision, it
4 shall be an unlawful discriminatory practice of any employer, labor
5 organization, employment agency, licensing agency, or its employees,
6 agents or members to directly or indirectly use an applicant's personal
7 credit history as hiring criteria.
8 (b) An employer may request a credit history background check as part
9 of the application or promotion process where such history is shown to
10 be directly related to the occupational position sought by the applicant
11 or employee. Such history shall not be a determinant factor in whether
12 the applicant or employee is ultimately hired or promoted to the posi-
13 tion sought.
14 (c) If an employee consents to a credit history background check as
15 provided in paragraph (b) of this subdivision, he or she shall be given
16 and sign an authorization of consent form which explicitly states the
17 specific purpose, uses and limitations of the credit history background
18 information as it pertains to the employment position sought.
19 § 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD04167-01-1
