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New York Fair Chance Act and Stop Credit Discrimination in Employment Act (SCDEA): 2016 Updates to the Law

Brick.Wall.Challenge.Employment.Discrimination.Dollar.Photo.2.28.16.jpgSome applicants unfairly face illegal hurdles in the hiring process. New York State and NY City laws prohibit employers from discriminating against employees and potential hires based on a number of protected characteristics (such as religion or sexual orientation). In general, employers are not even allowed to inquire about protected characteristics. Two relatively new laws in New York City now restrict how employers can inquire or use information regarding an employee’s credit history and criminal background, as well. In general, these new changes are discussed in this blog post. For specific advice on your situation, you should consult an experienced employment law attorney.

Stop Credit Discrimination in Employment Act (“SCDEA”)

The SCDEA makes it illegal for an employer, labor organization, or employment agency to request, obtain, or use the consumer credit history of an applicant or employee for the purpose of making an employment decision.

Some of the notable highlights of the SCDEA include:

• As with all protected classes, simply asking about the applicant’s/employee’s credit history is a violation, even if there isn’t a resulting adverse employment decision. This includes requesting an obtaining the credit history from a consumer reporting agency.

• Making an adverse business decision based on the individual’s credit history, however, would be a separate violation of the SCDEA.

• Fines and penalties can be costly. Depending upon the conduct and the frequency, a violation of the SCDEA could cost an employer $250,000 in civil penalties alone! And that doesn’t include other damages, such as back pay, front pay, compensatory damages, punitive damages, and attorneys’ fees.

• The definition of “consumer credit history” is broad, including the individual’s credit worthiness, credit standing, credit capacity, payment history; even seeking information about the applicant’s/employee’s potential bankruptcies or liens, debts and/or credit accounts would constitute a violation of the SCDEA.

• While there are exemptions carved out from the law, they are limited and will be narrowly interpreted. As an example, those employers that are Financial Industry Regulatory Authority (“FINRA”) members are exempt from the SCDEA to the extent that the credit history check is being conducted on a person who, themselves, will be required to register with FINRA (as opposed to hiring a clerk or secretary, for example, which would then not be exempt.)

Fair Chance Act (“FCA”)

The FCA, which took effect in October 2015, prohibits the majority of employers in New York City from making any inquiries (including using advertisements, applications, or interview questions) about an applicant’s arrest or criminal record before making a job offer.

Some noteworthy points of the FCA include:

• If an occupational license has criminal record barriers, the employer is not necessarily exempt from the FCA; prior to extending a conditional offer of employment, the employer may only inquiry whether the applicant is licensed.

• In all other circumstances, only after extending a conditional offer may an employer then make any inquiries. If the employer later learns of the existence of a criminal record, and wants to revoke the offer based on the record, the employer must explain their choice to the applicant, using a Fair Chance Notice
• Employers must also provide the applicant with a copy of any documents that they relied upon, including any background checks conducted on the applicant, reports or public records. The applicant must then be given three business days to respond, and the employment opportunity must remain open during that period.

• If requested by the applicant, an employer must engage in a “constructive conversation” with the applicant to discuss the employer’s conclusions and how the applicant could address the employer’s concerns.

• The FCA extends to employees and interns, as well. For example, if an employee is considered for a promotion, the promotion must be conditionally offered prior to the employer inquiring or considering any criminal history.

Neither the SCDEA nor the FCA apply outside of New York City, however (although there are similar laws at the state level that may be the subject of a future post.) These laws apply to positions that are in New York City, itself (or where the majority of work conducted is within New York City.) It does not apply, however, to New York City residents applying for jobs outside of the city.

Know.Your.Rights.Folder.Dollar.Photo.2.28.16.jpgIf you have questions or concerns about either the SCDEA or FCA and their application to your specific situation, contact our experienced attorneys today for a confidential consultation.

Disclaimer: Thank you for visiting our Blog. This blog provides general information and thoughts about various employment law issues primarily in the New York Tri-State area and occasionally in other areas. You are welcome to read the posts. However, do not construe any content on this blog as legal advice or the creation of an attorney-client relationship. Again, we provide the content only for informational purposes. You should not make decisions based information on our blog since the application of the law depends on the facts and each situation may be different. In addition, the law in most jurisdictions is different and changes constantly and we make no representations that any information on our blog has been updated. The Blog should not be used as a substitute for competent legal advice from an experienced attorney in your state or jurisdiction. From time to time, a blog post may discuss a legal case – please note that the post may not contain the most to update information on the case as developments may have occurred after it was created.

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