Effective December 24, 2017, and unless they are otherwise exempt, employers will be guilty of a per se violation of New York City’s Stop Credit Discrimination in Employment Act (“SCDEA”) if they do any of the following:

• Request consumer credit history from an applicant;
• Request consumer credit history about an applicant from ESS;
• Use consumer credit history for employment purposes; or
• Request or require applicants for employment to consent to the disclosure of their consumer credit history to the employer

Violations of the SCDEA can result in penalties ranging from $125,000 to $250,000.  Employers need to tread with great care!

There are ten exemptions.  Employers are encouraged to examine those exemptions and determine whether any apply to the positions for which they are seeking to run an applicant’s consumer credit history.  If an exemption does apply, the employer must keep a log recording its use of the exemption, detailing such specifics as:

 

(1) the claimed exemption;

(2) why the claimed exemption applies;

(3) the name and contact information of the applicants covered by the exemption;

(4) the job duties of the exempted position;

(5) the qualifications necessary to perform the exempted position;

(6) a copy of the applicant’s credit history that was obtained;

(7) an explanation of how the credit history was obtained; and

(8) a description of how the credit history led to the employment action.

This log must be kept for five years and produced to the Human Rights Commission upon demand.

When it comes to compliance with the SCDEA, we recommend the following decision tree:

1. Are you ordering a background check on someone who lives or works in New York City?

• If no, then stop. You do not need to worry about the SCDEA.
• If yes, are you ordering a consumer credit report?
  1. If no, do you typically use ESS’s SwiftHire service?
     1. If no, then you must strip all reference to credit out of your standard FCRA consent form before asking the applicant to consent to a background check;
     2. If yes, then you must be sure not to use ESS’s SwiftHire process, as doing so will violate the SCDEA, and you should instead use an alternate FCRA consent containing no reference to authorizing the disclosure of credit information.
  2. If yes, you are ordering a consumer credit report, then you must notify the applicant in advance of ordering the credit report of the exemption that applies to that applicant. You may now use ESS’s SwiftHire process (if you are using that process).  Remember to complete the exemption log entry for this applicant at the conclusion of the hiring process.

If you have questions or concerns about ordering a consumer credit report from ESS in light of this new law, please contact our Client Care team at 866-859-0143 or results@es2.com.