New York employers have another hiring compliance issue to add to the list.
Effective April 18, 2026, New York significantly restricts when employers may request, receive, or use an applicant’s or employee’s consumer credit history in employment decisions. For many employers, that means credit checks are now off-limits for most positions.
If your business uses background checks, works with a screening vendor, or has old job applications asking about credit history, now’s the time to review those practices.
This isn’t just a technical update. It changes how employers across New York should approach hiring, promotions, compensation, discipline, and other employment decisions.
What New York’s New Credit Check Law Does
On December 19, 2025, Governor Kathy Hochul signed legislation amending New York’s Fair Credit Reporting Act, found in Article 25 of the General Business Law. The law updates General Business Law §§ 380-a and 380-b and restricts the use of consumer credit history in employment decisions.
Under the amended law, employers generally can’t request or use consumer credit history for employment purposes. They also can’t discriminate against an applicant or employee in hiring, compensation, or the terms, conditions, or privileges of employment based on consumer credit history.
For employers, the practical takeaway is this: unless a specific exception applies, credit history shouldn’t be part of the hiring or employment decision-making process.
What Counts as Consumer Credit History
The law defines “consumer credit history” broadly.
Under General Business Law § 380-a(w), consumer credit history includes information about a person’s creditworthiness, credit standing, credit capacity, or payment history. That can include:
- A consumer credit report
- A credit score
- Information about credit accounts
- Late or missed payments
- Charged-off debts
- Items in collections
- Credit limits
- Prior credit report inquiries
- Bankruptcies
- Judgments
- Liens
That means employers shouldn’t assume the law applies only when they pull a formal credit report from a credit bureau. It also can apply when an employer gets credit-related information directly from the applicant or employee.
So, for example, asking an applicant about debt, missed payments, bankruptcy, or collections during the hiring process can create risk unless a statutory exception applies.
Why New York Made This Change
The Legislature’s sponsor memo pointed to several concerns, including the lack of meaningful connection between credit history and job performance, the risk of errors in credit reports, and the reality that financial setbacks often result from circumstances unrelated to whether someone can do the job.
For employers, the “why” matters less than the compliance obligation. The State has made clear that, in most situations, employment decisions should be based on qualifications, experience, performance, and ability to do the work, not personal credit history.
Who Must Comply
The law applies broadly to:
- Employers
- Labor organizations
- Employment agencies
- Agents acting on behalf of those entities
That last category matters. If your company uses a third-party background check vendor, recruiter, staffing agency, or another outside partner, you’ll want to make sure those partners aren’t requesting or providing credit history information for New York applicants or employees unless an exception applies.
The Prohibitions Under the Law
Unless an exception applies, employers shouldn’t:
- Request an applicant’s or employee’s consumer credit history
- Use consumer credit history for employment purposes
- Ask applicants or employees about credit scores, credit accounts, debts, collections, bankruptcies, judgments, liens, or similar financial history
- Use credit history to make decisions about hiring, firing, promotion, demotion, discipline, compensation, or other terms and conditions of employment
This means credit history generally shouldn’t be used to decide whether someone gets a job, keeps a job, receives a promotion, qualifies for a particular pay rate, or receives other employment opportunities.
When Credit Checks Still Are Allowed
The law includes narrow exceptions. Employers may be able to request or use consumer credit history when the position or situation fits within one of the exceptions in the law.
Those exceptions include, among others:
- Positions where use of consumer credit history is required by New York State or federal law, or by certain self-regulatory organizations
- Police officer, peace officer, law enforcement, or investigative roles
- Certain positions subject to a state-agency background investigation
- Positions where the employee must be bonded under New York or federal law
- Positions requiring a federal or State security clearance
- Non-clerical positions with regular access to trade secrets, intelligence information, or national security information
- Positions with signatory authority over third-party funds or assets valued at $10,000 or more
- Positions involving fiduciary responsibility to the employer with authority to enter financial agreements valued at $10,000 or more on behalf of the employer
- Positions with regular duties allowing the employee to modify digital security systems protecting the employer’s or client’s networks or databases
The statute also makes clear that employers aren’t prevented from requesting or receiving consumer credit history information pursuant to a lawful subpoena, court order, or law enforcement investigation.
Employers should be careful here. These exceptions are specific. They shouldn’t be stretched to cover ordinary office, retail, hospitality, healthcare, food service, customer service, or administrative roles just because an employee handles confidential information or works around company property.
Don’t Overread the “Trade Secrets” Exception
One exception covers certain non-clerical positions with regular access to trade secrets, intelligence information, or national security information. But the law also defines “trade secrets” carefully.
General company information doesn’t automatically qualify. The statute says “trade secrets” doesn’t include general proprietary company information such as handbooks and policies. It also says regular access to trade secrets doesn’t include access to or use of client, customer, or mailing lists.
That’s important for employers. Many businesses may be tempted to say “our employees have access to confidential information, so we still can run credit checks.”
Not so fast. Confidential business information and statutory “trade secrets” aren’t always the same thing.
What New York Employers Should Do Now
Employers should review their hiring and background check practices immediately. Even if your company has used credit checks for years, the new law requires a fresh look.
Here are practical steps to take now:
Review job applications and hiring forms. Remove questions asking applicants to disclose credit history unless you’ve confirmed a specific exception applies.
Audit background check practices. Make sure your screening vendor isn’t providing credit history information for New York applicants or employees unless the role fits within a statutory exception.
Update offer and onboarding procedures. If your process includes a background check authorization, confirm it doesn’t sweep in credit history when it shouldn’t.
Train HR and managers. Managers shouldn’t ask about credit scores, debt, missed payments, bankruptcy, collections, liens, or similar financial issues during interviews or employment discussions.
Review promotion, discipline, and compensation practices. This law isn’t limited to hiring. Credit history generally shouldn’t factor into decisions about pay, promotion, discipline, termination, or job conditions.
Document any claimed exception. If your business believes a role fits within an exception, identify the exact statutory exception and keep a written explanation of why it applies.
Update vendor agreements. Employers should confirm that background check companies, recruiters, and staffing partners understand New York’s limits and won’t request or share prohibited credit information.
Bottom Line for Employers
New York employers should treat consumer credit history as generally off-limits in employment decisions unless a specific legal exception applies.
The safest approach is simple: don’t request, receive, or consider credit history for New York applicants or employees unless you’ve confirmed that the position fits within one of the law’s narrow exceptions.
This is a good time to clean up hiring forms, background check procedures, vendor contracts, and manager training. A small compliance review now can help avoid a much bigger problem later.
If your business uses background checks or you’re unsure whether one of the law’s exceptions applies to a particular position, we can help you review your process and reduce risk.
For guidance, contact The Coppola Firm at 716.839.9700 or info@coppolalegal.com.
