LawFlash

New York City Council Passes Bill Amending Human Rights Law

April 22, 2015

Employers are prohibited from using credit history in employment decisions, with some exceptions.

Last week, the New York City Council passed Proposed Introductory Bill Number 261-A, which amends the New York City Human Rights Law (NYCHRL) to prohibit employers from using consumer credit history in making employment decisions. The bill broadly defines “consumer credit history” to include consumer credit reports, credit scores, and information obtained directly from an individual regarding details about credit accounts, bankruptcies, judgments, or liens. The NYCHRL permits individuals to bring private causes of action, and unlike federal and New York State antidiscrimination laws, allows for the award of unlimited punitive damages, compensatory damages, and attorney fees.

The bill specifically excludes from the ban the use of credit history where required by state law, federal law, regulations, or a self-regulating company organized under the Securities Exchange Act of 1934. The bill also carves out exemptions for certain categories of jobs, including the following:

  • Positions that require an employee to be bonded under city, state, or federal law
  • Positions that grant signatory or fiduciary authority over third-party funds, assets, or financial agreements valued at $10,000 or more
  • Positions with regular duties that permit an employee to modify digital security systems
  • Nonclerical positions with regular access to trade secrets, intelligence information, or national security information

The exception provided for those with “regular access to trade secrets” could provide fertile ground for litigation. The bill limits “trade secrets” to information (a) that derives independent economic value from its confidential nature, (b) that an employer takes reasonable efforts to secretly maintain, and (c) that can be reasonably considered “the end product of significant innovation.” Expressly excluded from the definition of “trade secrets” are general proprietary company handbooks, policies, and information. Further, “access” to trade secrets expressly excludes “access to or the use of client, customer or mailing lists.” Employers should review policies and specific job descriptions when considering the use of consumer credit history in making hiring decisions and consult with legal counsel where appropriate.

If signed by Mayor Bill de Blasio, New York City will join other jurisdictions (California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, Washington, and the City of Chicago) that have passed similar bills.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Philadelphia
Paul C. Evans

Pittsburgh
Christopher K. Ramsey

New York
Melissa D. Hill
David A. McManus
Christopher A. Parlo
Ira G. Rosenstein
Andrew J. Schaffran
Douglas T. Schwarz
Samuel S. Shaulson
Kenneth J. Turnbull