New York State Restricts the Use of Credit Checks for Employment Decisions

New York State Governor Kathy Hochul has signed a law that amends the New York Fair Credit Reporting Act to prohibit employers from obtaining or using credit history for employment decisions.  The law becomes effective April 18, 2026.

Specifically, the amendment makes it unlawful for an employer, labor organization, employment agency, or its agent to:

• Ask for or obtain consumer credit history for employment purposes; or
• Use such information when making decisions related to hiring, compensation, or any other terms or conditions of employment.

“Consumer credit history” is defined as “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 an employer obtains directly from the individual regarding (i) details about credit accounts, including the individual’s number of credit accounts, late or missed payments, charged-off debts, items in collections, credit limit or prior credit report inquiries, or (ii) bankruptcies, judgments or liens.”

The amendment does contain certain limited exceptions when employers utilize consumer credit history.  The new law does not apply to:

• Employers required by state or federal law or by a self-regulatory organization to use an individual’s consumer credit history for employment purposes;
• Persons applying for employment as peace officers, police officers, or positions with a law enforcement agency;
• Persons in a position subject to a background investigation by a state agency where the person is in an appointed position bearing a high degree of public trust;
• Persons in a position required to be bonded under state or federal law;
• Persons in a position requiring security clearance under state or federal law;
• Persons in a non-clerical position having regular access to trade secrets, intelligence information or national security information;
• Persons in a position with (a) signatory authority over third-party funds or assets valued at $10,000 or more or (b) have a fiduciary duty or authority to enter into financial transactions valued at $10,000 or more on behalf of the employer; or
• Persons in a position whose regular duties allow the employee to modify digital security systems. 

In addition, the law restricts consumer reporting agencies from providing a consumer report containing credit-history information for employment related purposes unless a statutory exemption applies. 

New York employers that use credit checks for hiring or other employment related decisions should review their policies and procedures to ensure compliance with the new amendment.

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