NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1316
SPONSOR: Dinowitz (MS) TITLE OF BILL:
An act to amend the general business law, in relation to prohibiting the
disclosure or use of a person's consumer credit history to an employer,
labor organization, employment agency or agent thereof for purposes of
employment decisions
PURPOSE OR GENERAL IDEA OF BILL:
This bill would prohibit an employer or potential employer from using a
job applicant or employee's consumer credit report in his or her deci-
sion to hire, terminate, promote, demote, discipline, compensate, or in
setting the terms, conditions, or privileges of employment.
SUMMARY OF SPECIFIC PROVISIONS:
Section one of the bill adds subdivision (w) to § 380-a of the general
business law to add a new definition of consumer credit history.
Section two of the bill reletters subdivision (d) to subdivision (g) of
§ 380-b of the general business law and adds subdivisions (d), (e), and
(f) to state that it shall be an unlawful discriminatory practice for an
employer, labor organization, employment agency, or any agent thereof to
request or to use for employment purposes the consumer credit history of
an applicant for employment or employee, or otherwise discriminate
against an applicant or employee with regard to hiring, compensation, or
the terms, conditions or privileges of employment based on the consumer
credit history of the applicant or employee. The section also outlines
exceptions for certain employers and employees. These provisions also do
not preclude an employer from requesting or receiving consumer credit
history information pursuant to a lawful subpoena, court order, or
specific law enforcement investigation.
It shall additionally be an unlawful discriminatory practice for any
state or municipal agency to request or use for licensing or permitting
purposes information contained in the consumer credit history of an
applicant, licensee, or permittee for licensing or permitting purposes.
This does not apply to an agency required by state or federal law to use
an individual's consumer credit history for licensing or permitting
purposes. These provisions should not be construed to affect the ability
of an agency to consider an applicant's, licensee's, registrant's, or
permittee's failure to pay any tax, fine, penalty or fee for which
liability has been admitted by the person liable thereof, or for which
judgment has been entered by a court or administrative tribunal of
competent jurisdiction, or any tax for which a government agency has
issued a warrant, or a lien or levy on property. Further, these
provisions shall preclude a licensing agency from requesting, receiving,
or using consumer credit history or using consumer credit history infor-
mation obtained pursuant to a lawful subpoena, court order, or law
enforcement investigation.
Lastly, this section allows for any employer, labor organization,
employment agency, or agent thereof subject to the provisions of this
section from complying with any local law, ordinance, or regulation with
respect to the use of consumer credit history for the employment
purposes except to the extent that those laws are inconsistent with any
provision of this section, and then only to the extent of such incon-
sistency. For purposes of this subdivision, a local law, ordinance, or
regulation is not inconsistent with this section if the protection such
law or regulation affords an employee or job applicant is greater than
the protection provided by this section.
Section three of the bill directs the division of human rights to
request information from state, local agencies, and nongovernmental
employers regarding the agencies' and employers' use of the exemptions
established by subdivision (d) of 380-b of the general business law for
purposes of hiring and employment. Within two years of the effective
date of this act, the division of human rights shall submit to the
legislature a report concerning the results of such request and any
relevant feedback from agencies and employers.
Section four of the bill amends paragraph 3 of subdivision (a) of 380-b
of the general business law to add language requiring that a consumer
report furnished for employment purposes must exclude information that
bears on a consumer's credit worthiness, credit standing, credit capaci-
ty, or credit history except where authorized pursuant to paragraph (2)
of subdivision (d) of this section.
Section five of the bill provides the effective date.
JUSTIFICATION:
This bill would prohibit an employer or potential employer from using a
job applicant's or employee's consumer credit report in his or her deci-
sion to hire, terminate, promote, demote, discipline, compensate, or in
setting the terms, conditions, or privileges of employment. There is
little to no evidence that shows a correlation between credit history
and job performance. Nonetheless, in today's job market, the majority of
large employers are now using credit checks as part of their hiring
process and in how they treat their existing employees. In addition to
lacking any such meaningful correlation, the Federal Trade Commission
has released a study indicating that as many as one in four consumers
may have a "material error" in their credit reports. At a public hearing
on the accuracy and use of consumer credit reports, both the credit
reporting industry and numerous consumer advocates testified that
millions of Americans have errors in their credit reports that put them
in a lower credit risk tier, whether they are aware of any such errors
or not. Many New Yorkers, through no fault of their own, have less than
ideal credit histories that may stem from issues completely unrelated to
their job performance or capabilities. These consumers
are disadvantaged because employers are using credit reports to deter-
mine if an applicant or employee is worthy of a job or a promotion. This
bill would put an end to this practice.
PRIOR LEGISLATIVE HISTORY:
2023-24: A.779-C - Third Reading Calendar / S.1731-D - Passed Senate
2021-22: A.1161-A - Referred to Consumer Affairs and Protection /
S.2631-A Referred to Consumer Protection
2019-20: A.2611-E - Passed Assembly / S.2884-E - Third Reading Calendar
2017-18: A.5310-A - Ordered to Third Reading Calendar/S.5653B - Referred
to Consumer Protection
2015-16: A.2372 - Referred to Consumer Affairs and Protection/S.1545A
Referred to Consumer Protection
2013-14: A.7056- Passed Assembly / S.3868-B- Referred to Consumer
Protection
FISCAL IMPLICATIONS:
None to the State.
EFFECTIVE DATE:
This act shall take effect 120 days after it becomes law.
