Seyfarth Synopsis: Effective April 18, 2026, New York State will prohibit employers from requesting or using consumer credit history for employment decisions, with only narrow exemptions. The law also prohibits background screening agencies from providing credit history information unless an exemption applies. This change aligns New York with a growing number of jurisdictions limiting employer use of credit information.
On December 19, 2025, Governor Kathy Hochul approved S03072, which amends the New York State Fair Credit Reporting Act (Gen. Bus. Law § 380 et seq.) to limit how employers may use credit information. Employers throughout New York state (as opposed to only New York City previously (NYC Admin. Code §§ 8-107(24))) will no longer be permitted to request or rely on an applicant’s or employee’s consumer credit history when making employment-related decisions, except in narrow circumstances. This amendment will go into effect on April 18, 2026.
New York joins a growing group of states that restrict the use of credit history in employment—bringing the total to eleven nationwide. States with similar laws already include California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington. Similar limitations are also in place in several other jurisdictions across the country, including New York City; the District of Columbia; Chicago; Cook County, Illinois; Madison, Wisconsin; and Philadelphia, Pennsylvania.
Key Restrictions Imposed by S03072:
Once in effect, the law generally 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.”
These prohibitions apply broadly, covering both applicants and current employees, as expressly stated in the amendment. Because the statute bars the use of consumer credit history for employment purposes, its protections extend to any individual whose credit information is obtained or evaluated in connection with an employment-related decision.
Additional Restrictions on Consumer Reporting Agencies:
The amendment also imposes restrictions on consumer reporting agencies, sometimes known as background screening companies. A consumer reporting agency may not provide a consumer report containing credit-history information for employment purposes unless a statutory exemption applies. This requirement mirrors the employer-side prohibition and prevents background providers from supplying credit information where employers may not lawfully use it.
Limited Exemptions Under the Law:
The amendment contains several narrowly tailored exemptions. Employers may request or use consumer credit history only when the role or employer falls into one of the following categories:
- The employer is required to obtain or consider credit information under state or federal law, or by a self-regulatory organization as defined in the Securities Exchange Act of 1934.
- The position is for a peace officer, police officer, or another law-enforcement or investigative role within a governmental agency.
- The role is an appointed position that must undergo a state-required background investigation and involves a high degree of public trust.
- The position requires the employee to be bonded under state or federal law.
- The role requires a federal or state security clearance.
- The position is non-clerical and involves regular access to trade secrets, intelligence information, or national security information.
- The individual has signatory authority over $10,000 or more in third-party funds or assets, or holds a fiduciary role permitting them to enter financial agreements of $10,000 or more on the employer’s behalf.
- The role includes regular duties that involve modifying digital security systems that protect the employer’s or its clients’ networks or databases.
Except for these narrow categories, employers and their agents may not request or use consumer credit history for employment purposes.
Impact on New York City Employers:
New York City already bans most employer credit checks under the Stop Credit Discrimination in Employment Act (SCDEA), which has been in effect since 2015. Many of the exemptions under S03072 closely mirror those under the SCDEA, and the state law does not preempt the New York City Human Rights Law. As a result, NYC employers must continue to apply whichever law—state or city—offers the greatest employee protection. Because the SCDEA is already one of the strictest credit-check laws in the country, many NYC employers may see little or no change in their current practices once the state law takes effect.
Considerations for Multi-Jurisdiction Employers:
Employers operating in multiple states must account for different credit-check restrictions across jurisdictions. Eleven states and several major cities now limit the use of consumer credit information in employment decisions. Employers with operations in both restricted and unrestricted jurisdictions may benefit from assessing their needs and circumstances to determine an optimal solution for compliance in light of the differing laws that may apply. Employers outside of jurisdictions that restrict credit checks may also consider their need and handling of credit checks in the employment context in light of this continuing trend.
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