NYC Passes Ban on Credit Checks for Most Job Applicants

An Interview. Image from SportSuburban via Flickr

A new law would ban employers in New York City from prying into the credit backgrounds of job applicants, finally shutting down what amounts to a major mechanism of legal discrimination in hiring practices. Raw Story reports the legislation was passed “overwhelmingly” by the City Council on Thursday, and is now awaiting the signature of Mayor Bill de Blasio. By passing the law, New York joins the 10 states and other municipalities, including Chicago, that have already banned the practice in most of its forms.

Companies that use credit checks to screen candidates claim that it keeps out those with badly managed debt and shaky personal financial habits, who would be, by their estimation, more likely to mishandle or steal the company’s funds.

“There is no demonstrated correlation between people’s credit history and their likelihood to commit fraud or theft, or with their job performance,” Brooklyn Councilman Brad Lander, who sponsored the bill, told Raw Story. “It simply adds up to discrimination.”

Obviously, there are many ways that an individual could accumulate and fall behind on debt, most of which do not make someone untrustworthy or irresponsible. By telling someone looking for a job that they’re ineligible due to past medical costs, or because they graduated into a cratering economy, or are essentially just too poor to be hired, employers can indulge their own biases, further cementing the spiraling effects of wealth inequality and locking job seekers into a depressing trap.

“Someone loses their job,” Chi Chi Wu, a staff lawyer at the National Consumer Law Center in Boston, told the New York Times in 2013, “so they can’t pay their bills — and now they can’t get a job because they couldn’t pay their bills because they lost a job? It’s this Catch-22 that makes no sense.”

Photo by Lendingmemo.com via Flickr

Rather than acting as a useful tool for evaluating people, the practice amounts to—as Michelle Chen put it last year in an article for the Nation—an “arbitrary measurement that tracks people into a self-fulfilling prophecy of structural disadvantage.” The credit history check also taps into a deeper, more dangerous concept in conservative thought, bolstered by “bootstrap theory,” prosperity theology, and the just-world fallacy to equate morality with wealth—basically, the belief goes, if you’re poor or in debt, it’s because you’re a bad person and you deserve it.

In 2012, 47 percent of employers used credit checks for screening candidates, according to a study from the Society for Human Resource Management. “As a researcher, I’d like to think that if about half of all employers are doing this, they must have some real evidence that it’s valuable,” Amy Traub, a senior analyst at policy group Demos told the New York Times two years ago. “But in this case that evidence is really lacking.” Traub is the author of “Discredited: How Employment Credit Checks Keep Qualified Workers Out of a Job,” a paper that outlines, among other things, how often bad credit is the result of medical problems, the high frequency of errors in credit reporting, and how the issue disproportionately impacts people of color. Today, the NYT writes that supporters of the bill claim the current NYC legislation will “help end discrimination against minority job applicants, who are often the victims of predatory lending that can lead to poor credit.”

According to the Times, Mayor De Blasio is expected to sign the new law, which—though it contains nearly a dozen exemptions—is said to be the most comprehensive of its kind. The new legislation should be excellent news for the metro area’s roughly 500,000 unemployed individuals; progressive groups are calling it a significant step for working-class New Yorkers and a dent in the high cost of being poor in America. As per the NYT:

Labor unions, liberal-leaning think tanks and groups that advocate on behalf of low-income residents joined several council members in front of City Hall to cheer the legislation, seen as a major victory since a similar bill died in December 2013.

“How can you change your credit, improve your credit and have a better life without employment?” said Shelly Martin, a Harlem entrepreneur who has become a spokeswoman for the local movement.