New York employers: Stop running credit checks!
Unless someone is going to have free reign with the company checkbook, you cannot run a credit check for a job candidate – even if they will be handling cash, processing credit card payments, or having other access to finances.
Credit check bans in general
Many cities and states have passed laws limiting the ability to run a credit check on a job candidate or current employee. This is to prevent an individual who has had some type of financial struggle in the past from having that be a barrier to employment.
Typically these laws give parameters for when you can run a credit check – such as if the employee is going to have direct access to company finances or to customer/patient payments. Running a credit check in these situations can go a long way to prevent a serial embezzler from getting a job with you and harming your business.
New York state law goes to the extreme
Unfortunately for well-intentioned employers, New York has taken things much more than a step further. They’ve effectively barred the use of credit checks in almost all cases. Just because a position deals with money doesn’t mean that you can look into their credit history. This means that you’ll have to step up in other ways to protect finances in your business.
The law is relatively straightforward – no asking about an employee’s consumer credit history (i.e. credit scores, bankruptcies, liens, etc.). This means you can’t ask the employee directly or pull the information from a background check.
For most of you reading this, the only situation where a credit check is allowed is if the individual will have the authority to enter into financial agreements of over $10,000.00 on the company’s behalf.
This may be applicable if the individual will be a high level manager who will be able to make significant purchases on your behalf. It may also apply to a financial coordinator who has authority to enter into payment plans on your behalf. But in both cases, they would need to be able to independently sign on your behalf for something over $10,000.
What This Means For You
Using a trusted background check company like National Crime Search is absolutely imperative. A professional background check company will be aware of state laws and will not inadvertently share information with you that could put you out of compliance.
How we can help
CEDR members can consult with our team of advisors about how this law applies to any job candidate by contacting the Solution Center at 866-414-6056 or support@cedrsolutions.com. We can discuss how the law applies to an individual hiring situation, other things to do in the hiring process in lieu of a credit check, and precautions to take when giving an employee access to financial information.
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