EEOC Issues Ruling on Workplace Sexual Orientation Discrimination

On July 15, 2015, the U.S. Equal Employment Opportunity Commission (“EEOC”) issued its ruling in Complainant v. Foxx finding that all types of discrimination based on sexual orientation are forms of sex discrimination prohibited by Title VII of the Civil Rights Act of 1964.  The ruling is a victory for the Lesbian Gay Bi-Sexual and Transgender (“LGBT”) community and means that LGBT employees now have protection comparable to other employees in the workplace.  Previously, the EEOC limited sexual orientation discrimination claims to cases where workers alleged they were victims of stereotypes based on sex.

The case was brought by a federal air traffic control specialist in Miami, who contended he was denied a promotion because he was gay.  While the EEOC noted that the language contained in Title VII does not distinguish “sexual orientation” from “sex,” the EEOC found that there could no longer be a distinction between the two.  Further, the EEOC noted that “[a]n employee could show that the sexual orientation discrimination . . . experienced was sex discrimination because it involved treatment that would not have occurred but for the individual’s sex.”  According to the EEOC, to interpret the protections granted under Title VII as exclusionary with regard the LGBT community, is to incorrectly interpret Congress’s intent.  The EEOC also reasoned that that if Congress intended for the statute to apply solely to heterosexual individuals, a revision to the language would have already been made.  The EEOC based its ruling in part on the U.S. Supreme Court’s 1989 decision in PriceWaterhouse v. Hopkins, which held that is was a violation of Title VII to discriminate against an individual for failing to conform to gender-based stereotypes.

While the EEOC’s decision is persuasive, it is up to the federal courts to give weight to the EEOC ruling and decide whether to apply this ruling to claims by private-sector employees.  In many states, including New Jersey, it is already illegal for employers to discriminate on the basis of sexual orientation and gender identity in employment, education, housing and public accommodations.

On July 23, 2015, federal legislation to ban discrimination against LGBT individuals was introduced by U.S. Senator Cory Booker (D-N.J.) and 39 of his fellow Senators.  U.S. Sen. Robert Menendez (D-N.J.) is one of the bill’s co-sponsors. The new law, entitled the Equality Act of 2015, would explicitly add sexual orientation and gender identity to Title VII and would cover employment, housing, public accommodations, education, jury service and credit.

Employers’ Takeaways:

  • The EEOC’s decision extending Title VII’s protections to claims based on sexual orientation is binding on all federal agencies, departments and employees.
  • Both public and private employers should consider revising their non-harassment, non-discrimination and EEO policies and practices, to conform to the EEOC’s decision.
  • Employers must advise and train their managers and employees to ensure a work environment free of harassment, discrimination, or retaliation based on sexual orientation.

For more information regarding the EEOC’s decision and how it impacts your workforce, please contact John C. Petrella, Esq., Director of the firm’s Employment Litigation Practice Group at jpetrella@genovaburns.com, or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.  This blog post was written with the assistance of Amanda Frankel.

New Jersey Supreme Court Rules that CEPA is a Watchdog’s Best Friend

On July 15, 2015 in a 5-0 decision, the Supreme Court of New Jersey issued its long awaited decision in Lippman v. Ethicon, Inc., which affirmed and modified the Appellate Division’s ruling that employees, whose core job duties include monitoring whether their employers comply with standards and regulations, are protected under the New Jersey Conscientious Employee Protection Act (“CEPA”).  While advocates hailed the decision as a major victory for workers’ rights, employers fear it will expose companies across New Jersey to more lawsuits.

In Lippman, the plaintiff brought an action under CEPA against his former employer, Ethicon, Inc., a subsidiary of Johnson & Johnson, alleging that he was terminated due to his whistleblowing activities with regard to safety concerns he had with some of the pharmaceutical products developed by the defendants.  Lippman’s high-level position however required him to assess health risks posed by products and to provide medical input in determining whether corrective measures were required.  After he complained, Lippman was terminated.  Ethicon maintained that Lippman was fired for engaging in a romantic relationship with a subordinate employee.  The Superior Court granted the defendants’ motion for summary judgment and dismissed Lippman’s case finding that, since Lippman’s job duties included raising issues regarding product safety, he was not entitled to protection under CEPA.  On appeal, the Appellate Division reversed finding that “watchdog employees” are the most vulnerable to retaliation because they frequently speak out and that CEPA does not limit protection based on an employee’s job title or function.

The New Jersey Supreme Court agreed and ruled that CEPA is remedial legislation and that the statutory cause of action created by CEPA applies equally to all employees regardless of their specific job duties.  The Court found that there is no evidence of legislative intent to have CEPA operate any other way due to its liberal construction.  The Court also found that CEPA protects employees who “refuse to participate” in any activities they believe are unlawful, implying it protects activities related to an employee’s normal job duties, since “it would be likely that the employee would be asked to participate in employer activity within the course of, or closely related to, his or her core job functions.”  Thus, there can be no additional requirements imposed on watchdog employees unless and until the legislature specifically expresses such intent to distinguish employees who are entitled to CEPA protection.  The Court also rejected the Appellate Division’s requirement that employees must demonstrate they pursued and exhausted all internal means of securing compliance in order to bring a claim under CEPA.  The Supreme Court found that this requirement was “incompatible with prior precedent and imposes an obligation nowhere found in the statutory language.”

Employers’ Takeaways:

  • CEPA’s protections extend to all employees regardless of their job duties; even those who are employed for the explicit purpose of bringing concerns or potential issues to the attention of the company
  • There is no longer a requirement that employees must demonstrate an exhaustion of all internal means of securing compliance in order to secure whistleblowing protections under CEPA.
  • Employees, however, still need to demonstrate that they have suffered an adverse employment action (such as demotion, termination and the like), and that the adverse action occurred because they engaged in protected activity.
  • Companies that hire professionals to specifically engage in risk analysis such as the pharmaceutical industry should take extra precaution when making employment decisions regarding these types of employees. Management and Human Resources professionals must be trained and sensitized to protected conduct in all its forms.

For more information regarding this decision and to learn how you can protect your company from whistleblowing claims, please contact John C. Petrella, Esq., Director of the firm’s Employment Litigation Practice Group at jpetrella@genovaburns.com, or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.

Second Circuit Outlines The Way for Employers to Hire Unpaid Interns

On July 2, 2015, in a matter of first impression, the Second Circuit issued a ruling in Glatt v. Fox Searchlight Pictures, Inc., Nos. 13-4478, 13-4481 (2d Cir. July 2, 2015), and provided a new test for whether a worker can be classified as an unpaid intern under the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”). and thus entitled to compensation, including minimum wage and overtime.  The ruling by the Second Circuit rejected both the Department of Labor (“DOL”)’s six-factor test to determine whether or not an intern should be classified as an employee, and the U.S. District Court for the Southern District of New York’s previous reliance on the DOL’s test.

In 2013, the U.S. District Court for the Southern District of New York followed the DOL’s 2010 guidance for whether unpaid interns working in the for-profit private sector should be classified as employees.  The DOL test lays out six factors, including, for example, whether the internship experience is for the benefit of the intern, whether the intern displaces regular employees, and whether the employer derives an immediate advantage from the intern’s work. The DOL test requires that each and every factor must apply in order for a position to be an unpaid internship.  The District Court held that since not all of the DOL’s six factors applied, the plaintiffs in Glatt should have been classified as employees under the FLSA and the NYLL.

The Second Circuit, however, held that a “primary beneficiary test” should be utilized when determining whether or not employers need to pay their interns.  In other words, it must be determined whether the employer, rather than the intern, is the primary beneficiary of the relationship.  The Second Circuit found that the DOL six factor test was “too rigid” and unpersuasive, and was not entitled to deference.

To aid in determining whether the worker or the employer is the primary beneficiary, the Second Circuit articulated a “non-exhaustive” list of seven factors that should be considered and balanced when deciding whether the employer or intern is the primary beneficiary of the relationship:

  • The extent to which the intern and the employer clearly understand that there is no expectation of compensation;
  • The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutes;
  • The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit;
  • The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar;
  • The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning;
  • The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern; and
  • The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship

The Second Circuit made clear that no one factor is dispositive and that every factor need not point in the same direction to conclude that the intern is not an employee. Thus, Courts are free to look to other factors, and the failure to satisfy any one factor is not dispositive.  While the Second Circuit’s list of factors only adopted three of the DOL’s factors, it retained the DOL’s requirement that the position provide an educational value, suggesting that it is crucial to include an educational aspect in an unpaid internship.  The Second Circuit opined that this new test takes into account the “relationship between the internship and the intern’s formal education…by focusing on the educational aspects of the internship our approach better reflects the role of internships in today’s economy.”

The Glatt decision signals positive news for employers in New York, Connecticut and Vermont when determining whether or not they need to pay interns.  Private sector for-profit companies with internship programs should evaluate their programs to ensure that they are in compliance with all state and federal laws.  As the Second Circuit explained, a bona fide internship must “integrate classroom learning with practical skill development in a real-world setting.” It will be interesting to see whether or not other Circuit Courts find this ruling persuasive.

For more information regarding this decision and to learn how your business can implement best practices when implementing internship programs, please contact John C. Petrella, Director of the firm’s Employment Litigation Practice Group at jpeteralla@genovaburns.com or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.

New York City Restricts Use Of Criminal Records In Hiring Giving Job Applicants a “Fair Chance” at Employment

As expected, on June 29, 2015, New York City Mayor Bill de Blasio signed into law the Fair Chance Act (Intro. No. 318-A), making New York City the latest jurisdiction to prohibit employers from conducting pre-offer criminal background checks when hiring. The new law prohibits private employers who operate in New York City with four or more employees, from inquiring about applicants’ past criminal convictions until a conditional job offer has been made. After a conditional offer, an employer can commence a criminal background check and make inquiries related to criminal history. If a company decides to withdraw the offer after learning of the applicant’s criminal history, it needs to give the applicant a written explanation of the decision. The employer must conduct an individualized evaluation of any criminal conviction it discovers pursuant to the factors under existing New York State law. Further, the employer needs to hold the position open for three days to allow the applicant an opportunity to respond and provide any proof of rehabilitation. The Act also includes individual independent contractors performing work for the employer, if those individuals do not themselves have employees. Moreover, employers must not specify in job advertisements or other written statements that any position entails restrictions based on criminal records, unless expressly allowed by law (e.g., for law enforcement agencies).

Under the new law, the NYC Human Rights Commission is charged with enforcing its key protections. The Fair Chance Act does not affect federal and state laws that allow employers in certain industries to consider applicants’ criminal histories, including law enforcement, positions of public trust, and jobs that entail working with children.

The new law takes effect on October 27, 2015. Employers in New York City should begin consulting with legal counsel to ensure that their hiring process forms, job applications and hiring policies are in compliance with the new law. Legal compliance should also include educating managers, supervisors and recruiting personnel regarding these new standards to ensure they are communicated throughout the organization.

For more information regarding the Fair Chance Act and to learn how your business can implement best practices when hiring and conducting background checks, please contact John C. Petrella, Director of the firm’s Employment Litigation Practice Group at jpetrella@genovaburns.com or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.

N.J. Supreme Court Finds Chapter 78 Did Not Create an Enforceable Contract Right

In Burgos v. State of New Jersey, the New Jersey Supreme Court held that the 2011 pension and health benefit reform statute, known as Chapter 78, did not create an enforceable contract that was binding on the State to make the pension payments required by that legislation.

The decision is the result of multiple actions filed by individuals and unions, on behalf of New Jersey State employees, after the fiscal year 2015 budget included contributions that were less than 1.57 billion dollars that Chapter 78 required.  The Law Division accepted the Unions’ argument that Chapter 78 created a contractual right to the payment and failure to do so was an impairment of that contract.  The Supreme Court reversed.

The plain language of Chapter 78 set forth a clear statement that the failure to make the required pension contributions results in a contractual impairment.  Although the Supreme Court recognized the good intentions of the legislature in passing Chapter 78, the Court simultaneously rejected the legislature’s authority to do so.  The Court’s rationale was largely based upon two clauses within the New Jersey Constitution.

First, the Debt Limitation Clause of the New Jersey Constitution prohibited such action.  The intention of Chapter 78 could not set aside the broad, clear language contained in the Debt Limitation Clause.  In sum, this provision limits the amount of debt or liability the Legislature may incur on a year to year basis without a vote of public.  The Court found that the contributions required by Chapter 78 surpassed the permissible boundaries of the Debt Limitation Clause and therefore would require a vote of the public in order to pass constitutional muster.

Second, the Court reasoned that the mandates of Chapter 78 failed to meet the requirements of the Appropriations Clause of the New Jersey Constitution.  The Court reasoned that the legislature retains the power to annually appropriate funds as necessary.  The required contribution in Chapter 78 did not retain the legislature’s authority to annually appropriate such funds.

These two constitutional clauses were the linchpin in the Court’s decision to uphold the State’s failure to make the required Chapter 78 contributions.  While the Court explained the legal rationale for its decision, it also highlighted the practical imports of its decision as well, among which was the damage to the public trust.  In addition, the Court recognized the significant difficulties facing the pension system.  However, rather than fashion a judicial remedy, the Court called upon the public noting “it is the people’s responsibility to hold the elective branches of government responsible for their judgment and for their exercise of constitutional powers.”

The Court’s decision in Burgos negated the required State contributions of Chapter 78 to the pension system.  The issue of how to fund the depleted public employee pension system will continue to be at the forefront of future public debate.

For more information, or if you have any questions, please contact Joseph M. Hannon, Esq., at 973.535.7105, jhannon@genovaburns.com, or Jennifer Roselle Esq., at 973.646-3324, jroselle@genovaburns.com.

Third Circuit Offers Key Guidance on FMLA Regulations for Employers

Recently, the Third Circuit has issued two opinions that clarify the Family and Medical Leave Act (“FMLA”) regulations, giving crucial guidance to employers in navigating how to handle employees’ leave requests.

Sunset to Sunrise is Required to be an FMLA “Overnight” Success

First, late last month, the Third Circuit ruled that an employee’s hospital stay did not constitute an “overnight stay”, and therefore did not merit protection under the FMLA.  Under the FMLA, a “serious health condition” is defined as “an illness, injury, impairment, or physical condition,” that involves either inpatient care or continuing treatment by a care provider.  The regulations further define “inpatient care,” in part, as “an overnight stay in the hospital.”

In Bonkowski v. Oberg Industries, Inc., Case No. 14-1239 (3rd Cir. May 22, 2015), the plaintiff employee had a history of medical issues.  On November 14, 2011, he was given permission to leave work early after complaining of shortness of breath, chest pains, and dizziness.  The plaintiff went to the hospital later that night for his symptoms, and was admitted shortly after midnight and was discharged later the same day. Plaintiff was terminated the next day and brought suit alleging retaliation and interference with his rights under the FMLA.  The Court held that the plaintiff did not have a serious health condition because his trip to the hospital did not constitute an “overnight stay” within the meaning of the FMLA. The Third Circuit adopted a clear “bright-line” calendar test and ruled that for purposes of the FMLA, an overnight stay is “for a substantial period of time from one calendar day to another calendar day as measured by the individual’s time of admission and time of discharge.” The Third Circuit also suggested that “a minimum of eight hours would seem to be an appropriate period of time.”  Thus, an individual who is admitted to a hospital and discharged on the same calendar day appears to have a short-term condition, for which treatment and recovery are brief. Thus, the employee’s visit to the hospital would not be protected by the FMLA.

Employees Must Be Given Time to Clarify Medical Leave Requests

On June 22, 2015, on a matter of first impression, the Third Circuit in Hansler v. Lehigh Valley Hospital Network, Case No. 14-1771 (3rd Cir. June 22, 2015), held that an employer must give an employee the opportunity to cure any deficiencies in a medical certification submitted in support of FMLA leave. In Hansler, the plaintiff submitted a request for intermittent FMLA leave, along with a medical certification that stated that she would need about two days off per week for one month, but did not specify the nature of her medical condition. The defendant employer terminated Hansler for absenteeism without seeking further information from either her or her physician.  Hansler then sued her employer alleging interference and retaliation under the FMLA.

The employer argued that the request for leave was defective, because the FMLA requires that a chronic serious health condition persist for “an extended period of time,” but the employee’s certification indicated that her condition would only last for one month.  The Eastern District of Pennsylvania agreed; however, on appeal, the Third Circuit reversed.  The Third Circuit held that FMLA regulations require that if an employer determines that a medical certification is either incomplete or insufficient, it may deny the requested leave, but only after the employee has been given seven days to fix any deficiencies. The Third Circuit found Hansler’s certification wasn’t “negative,” meaning that on its face, it indicated Hansler did not have a “serious medical condition” because one month is not an “extended period” of time, but rather the certification was insufficient or incomplete because relevant information about her condition, including the diagnosis, was not yet available when she requested leave.  The Third Circuit found that this can be the case even if the employee’s original medical certification does not describe a condition that is covered under the FMLA. Thus, Hansler’s employer should have provided her with her seven days to cure the deficiencies in her medical certification.

Employers’ Takeaways 

  • In order to determine whether the employee’s hospital stay qualifies as an overnight stay under the FMLA, it must constitute a “substantial period of time” from one calendar day to the next as measured by the individual’s time of admission and time of discharge.
  • Employers must also review medical certifications submitted in support of FMLA leave extremely carefully in order to determine whether or not the information provided is negative or is simply incomplete or insufficient.
  • In cases where the medical certification is incomplete or insufficient, employers must notify an employee and allow him or her seven days to cure the deficiencies prior to acting on the request for FMLA leave.

For more information regarding these rulings and to learn how your business should be evaluating FMLA requests, please contact John C. Petrella, Director of the firm’s Employment Litigation Practice Group at jpeteralla@genovaburns.com or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.

Supreme Court Rejects Challenge to Affordable Care Act’s Tax Credit Provisions

On June 25, the U.S. Supreme Court, in a 6-3 decision, finally resolved a central issue under the Affordable Care Act (“ACA”) as to whether Congress’ failure to provide expressly for Federal subsidies to States that did not create their own health care Exchanges but opted for the Federal tax credits should prohibit payments of Federal tax credits to individuals who purchase their coverage from the Federal Healthcare Exchange.

The Court held that despite the inartful drafting and ambiguities in the legislation, the Court would enforce what it viewed to be Congress’ intent in the legislation to have State and Federal Healthcare Exchanges work the same in every State, regardless of whether the State has its own Exchange or depends on the Federal Exchange. The Court reasoned that its job was to read the words of the statute “in their context and with a view to their place in the overall statutory scheme” and concluded that the ACA “indicates that State and Federal exchanges should be the same,” and therefore, tax credits must be available on both State and Federal Exchanges.

In sum, the Court ruled that ACA tax credits are available under the State and the Federal Exchanges “to avoid the type of calamitous result that Congress plainly meant to avoid.”

For questions related to this development or ACA generally, please contact Patrick W. McGovern, Esq., Director of the Employee Benefits Practice Group and Partner in the Labor Law Group, at pmcgovern@genovaburns.com, or Gina M. Schneider, Esq., a member of the Employee Benefits Practice Group and Counsel in the Labor Law Group, at gmschneider@genovaburns.com.

New York City Is One Step Closer To Banning The Box Giving Job Applicants a “Fair Chance” at Employment

On June 10, 2015, the New York City Council approved a “Ban the Box” law that prohibits private employers from inquiring about applicants’ past criminal convictions until the point of a job offer. Although New York State already has a similar law which applies to city contractors and agencies, the new legislation, called The Fair Chance Act, extends these regulations to private employers. The policy applies to any employer with four or more employees that conducts business in New York City. Under the new law, an employer is not permitted to ask about criminal history and/or conduct a background check until a conditional job offer has been extended. If a company decides to withdraw the offer after learning of the applicant’s criminal history, it needs to give the applicant a written explanation of the decision. Further, the employer needs to hold the position open for three days to allow the applicant an opportunity to respond and provide any proof of rehabilitation.

The Fair Chance Act would not affect federal and state laws that allow employers in certain industries to consider applicants’ criminal histories, including law enforcement, positions of public trust, and jobs that entail working with children. Mayor De Blasio is expected to sign the bill in the coming weeks, and stated that “[t]his legislation seeks to actually open the door to jobs for people rather than damning them to no economic future.”

These new requirements take effect in 120 days following the law’s enactment. Employers in New York City should begin consulting with legal counsel to ensure that their hiring process forms, job applications and hiring policies are in compliance with the new legislation. Legal compliance should also include educating managers, supervisors and recruiting personnel regarding these new standards to ensure they are communicated throughout the organization.

For more information regarding this legislation and to learn how your business can implement best practices when hiring, please contact John C. Petrella, Director of the firm’s Employment Litigation Practice Group at jpetrella@genovaburns.com or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.

Potential Relief on the Horizon for Business Owners as New Jersey Legislature Considers Controversial Revision To Proposed Statewide Sick Leave Law

A new version of the proposed statewide New Jersey sick leave law, sponsored by Assemblywoman Pamela Lampitt (D-Voorhees) as well as other Democrats in the Assembly may potentially include a controversial amendment that would make the bill more palatable to businesses. The revised bill could come with an amendment that would pre-empt local governments from adding to any statewide sick leave requirements that would be enacted. NJBIZ is reporting that the revised bill – with such a pre-emption — could resurface by the end of this month.

As it currently stands, the proposed statewide bill allows full-time and part-time employees to earn one hour of paid sick time for every 30 hours worked. Employees at businesses with ten or more employees would have a 72-hour-per-year cap, while employees at businesses with nine or fewer employees would have their paid sick hours per year capped at 40. In its current form, the bill allows New Jersey municipalities to adopt their own local paid sick leave ordinances, as long as those ordinances were in compliance with the statewide law. Nine municipalities have already passed their own paid sick leave ordinances: Jersey City, Newark, Passaic, East Orange, Paterson, Irvington, Montclair, Trenton and Bloomfield.

Business groups widely support an amendment to the state bill that would pre-empt all local ordinances. The amendment would allow businesses to create a uniform plan for compliance with the state law, rather than adjusting paid sick leave policies in municipalities that have their own, more expansive paid sick leave laws. In interviews with NJBIZ, leaders from the New Jersey Chamber of Commerce and the New Jersey Business & Industry Association expressed disapproval of the idea of a statewide paid sick leave law, but acknowledged that amendments to the bill that would ease the burden on businesses would be welcome. Conversely, representatives from employee advocacy groups New Jersey Citizen Action and New Jersey Working Families informed NJBIZ that an amendment with local pre-emption would be an unwelcome addition to the statewide bill.

The Statewide bill’s sponsor in the Senate, Sen. Loretta Weinberg (D-Teaneck), seemed open to discussion, stating, “I am working with the Assembly sponsors to advance this measure and discussing the potential for amendments to the legislation.”

For more information regarding this proposed bill and to learn how your business can implement best practices when dealing with paid sick leave laws, please contact John C. Petrella, Director of the firm’s Employment Litigation Practice Group at jpetrella@genovaburns.com or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.

New York City Bans Employers From Using Credit Checks To Screen Job Applicants

Under a bill signed into law by Mayor Bill de Blasio on Wednesday, May 6, 2015, New York City businesses will be banned from using credit reports, bankruptcies and liens to disqualify applicants from employment. The Stop Credit Discrimination in Employment Act, which was sponsored by Councilman Brad Lander (D-Brooklyn), takes effect in 120 days and will amend the New York City Human Rights Law (NYCHRL).  Only three New York City Council members voted against the measure.  Advocates of the law pressed politicians for the prohibition arguing that law-abiding applicants cannot get jobs after being saddled with student loans or medical bills that have ruined their credit.  New York City will now join California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington, as well as the city of Chicago in limiting the use of credit checks for employment purposes.

Under the new law, it will be an unlawful discriminatory practice for a New York City employer, labor organization, or employment agency to request or use for hiring or other employment purposes the consumer credit history of an employee or applicant. “Consumer credit history” includes an individual’s credit worthiness, credit standing, credit capacity, or payment history as indicated by a consumer credit report, credit score, or information an employer obtains directly from the individual.

The new law, however, provides for several exemptions: law enforcement and other professions involving a high level of public trust or access to sensitive information, and for employers who conduct credit history checks pursuant to state and federal laws or regulations. For these positions, employers must still comply with the notice and consent requirements of the federal Fair Credit Reporting Act (FCRA) as well as any equivalent state or local laws.  FCRA requires notice to the applicant, providing a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act,” and obtaining written authorization/consent from the applicant or employee.

Given the amendment to the NYCHRL, the New York City Commission on Human Rights (“NYCCHR”) will be the law’s enforcement authority.  Individuals will be able to file a complaint with the NYCCHR or file an action directly in state court. Successful plaintiffs will be able to recover back pay, compensatory and punitive damages, attorneys’ fees and costs, reinstatement and/or other equitable relief.

Employers’ Takeaway

  • As of September 3, 2015, subject to limited exceptions, New York City employers may not utilize credit reports, bankruptcies and liens to disqualify applicants from employment.
  • Employers who use credit checks should carefully review the limited exceptions in the law to determine which positions, if any, can still be subject to credit checks.
  • Employers must review their application forms, offer letters, and handbooks with counsel to ensure the removal of any reference to credit checks for positions that do not meet one of the law’s limited exceptions.

For more information regarding the new law and to learn how Genova Burns can assist your company to comply with the new law by September 3, 2015, please contact John C. Petrella, Director of the firm’s Employment Litigation Practice Group at jpetrella@genovaburns.com or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.