NYC Bans Employment Credit Checks

In an effort to limit employment discrimination, New York City recently passed law 261-A which prohibits employers from denying applicants positions due to poor credit. Though states such as California and Maryland have similar laws already in place, New York’s differs in that virtually all jobs and positions are protected from employers aiming to use credit checks to deny or terminate employment.

According to the website of Cary Kane, LLP, while companies are allowed to fire employees for no reason, they can’t fire an employee for a reason prohibited by law.Unfortunately, companies often wrongfully terminate employees based on factors that are unrelated to financial needs or job performance. Several studies have shown that credit history has no correlation to worker and workplace productivity. Sadly, while there is no substantial evidence showing credit checks add value to employers, about 50 percent of employers across the nation continue to use credit checks in the employment process.

The Equal Employment Opportunity Commission has ruled and warned that employment credit checks can have a severe discriminatory impact. As a result, the new law is set to be especially helpful for communities of color where poor credit is compounded by limited job opportunities and predatory lenders. Commonly a result of uncontrollable circumstances, when taken into consideration during employment screening, debt can further limit job opportunities which subsequently results in an inability to pay off the debt. New York City seeks to put an end to the detrimental cycle and hopes that the new law will push other states to do the same.

Fortunately, other states are working to pass similar laws that will help curb employment discrimination and create better job opportunities for all.

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