Employers Must Prepare for New York’s Ban on Using Credit History in Employment Decisions, Effective April 18, 2026

On December 19, 2025, Governor Kathy Hochul signed into law S03072, amending the New York Fair Credit Reporting Act (“the “Act”) and prohibiting New York employers, labor organizations, employment agencies, or its agents from requesting or using a person’s consumer credit history for employment decisions, with specific, limited exceptions. Notably, the Act applies broadly to any entity that requests or uses consumer reports for employment purposes without limitation based on number of employees or entity size. This amendment is effective April 18, 2026. New York state joins several other states and jurisdictions limiting the use of credit history in employment.

What is an Unlawful Discriminatory Practice Under the Act?

As defined in the Act, “consumer credit history” means “an individual’s credit worthiness, credit standing, credit capacity or payment history,” as indicated by:

1. A consumer credit report;
2. Credit score; or
3. Information employers obtain directly from the individual regarding (i) details about their credit accounts, including the number of accounts, late or missed payments, charged-off debts, items in collections, credit limit or prior credit report inquiries, or (ii) bankruptcies, judgments, or liens.

In essence, the Act makes it an unlawful discriminatory practice for an employer to request or use an applicant’s or an employee’s consumer credit history when making employment decisions such as “hiring, compensation, or the terms, conditions or privileges of employment.”

What are Exceptions Under the Act?

There are limited, specific exceptions for employers, as follows:

1. The employer is required to obtain or consider credit information under state or federal law or by a self-regulatory organization;
2. Individuals applying for or in a position as a peace officer, police officer, or in a position with a law enforcement or investigative function in a law enforcement agency;
3. Individuals applying for or in a position subject to a background investigation by a state agency, and that position involves a high degree of public trust;
4. Positions required to be bonded under state or federal law;
5. Positions required to possess security clearance under state or federal law;
6. Non-clerical positions with regular access to trade secrets, intelligence information or national security information;
7. Positions with signatory authority over third party funds or assets valued at $10,000 or more; or authority to enter financial agreements valued at $10,000 or more on behalf of the employer; or
8. Positions with regular duties that allow the employee to modify digital security systems to prevent the unauthorized use of the employer’s or client’s networks or databases.

What Does the Act Mean for Employers?

In addition to the Act’s application to employers in New York State, New York City employers are also subject to the restrictions under the Stop Credit Discrimination in Employment Act (SCDEA), which became effective in 2015. Additionally, employers with operations in multiple states and jurisdictions must consider obligations and restrictions in other states related to consumer credit reporting to assess best practices in assuring compliance. This is significant, as a growing number of jurisdictions are constraining the use of consumer credit reports in the employment context.