New York has enacted a statewide prohibition on the use of consumer credit history in employment decisions. Effective April 18, 2026, amendments to the New York General Business Law make it an unlawful discriminatory practice for most employers to request or rely on an applicant’s or employee’s credit information in hiring and other employment-related decisions.
What the Law Prohibits
The statute adopts a broad definition of “consumer credit history,” covering not only traditional credit reports and scores, but also any information reflecting an individual’s creditworthiness, credit standing, credit capacity, or payment history. This includes details such as late or missed payments, collections, charged-off debts, credit limits, prior inquiries, and public records like bankruptcies, judgments, and liens.
Importantly, the law extends beyond third-party reports. Employers are prohibited from relying on information obtained directly from the individual, meaning even informal inquiries can create liability if used in an employment decision.
With limited exceptions, employers, labor organizations, employment agencies, and their agents may not:
- Request or obtain consumer credit history for employment purposes; or
- Use such information in decisions regarding hiring, compensation, or any terms, conditions, or privileges of employment.
The restriction applies to both applicants and current employees.
Limited Exceptions
The law contains narrowly defined exceptions where credit history may still be considered. These include situations where:
- Use of credit information is required by federal or state law or by certain securities industry regulators;
- The role pertains to a peace or law enforcement officer, or involves law enforcement or investigative functions;
- The role requires a security clearance or employee bonding;
- The position involves significant financial authority (e.g., authority over $10,000 or more in assets or financial agreements);
- The employee has regular access to trade secrets, intelligence, or national security information; or
- The role includes responsibility for modifying digital security systems.
These exceptions are expected to be interpreted narrowly, and employers should be prepared to substantiate their applicability for any given role.
Impact on Background Screening and Licensing
The law also affects consumer reporting agencies, which may not furnish credit history information for employment purposes unless an exception applies. This effectively aligns background screening practices with the employer-side prohibition.
In addition, state and municipal licensing agencies are now restricted from using consumer credit history in licensing or permitting decisions, except in limited circumstances such as when required by law or when evaluating established debts like unpaid taxes or fines.
Employer Next Steps
With the law now in effect, employers should take immediate steps to ensure compliance:
- Remove credit checks from standard background screening protocols for most roles.
- Review and update applications, interview practices, and policies to eliminate prohibited inquiries.
- Coordinate with background screening vendors to ensure credit information is excluded where required.
- Conduct a position-by-position analysis before relying on any statutory exception.
- Train HR personnel and hiring managers on the new restrictions.
Bottom Line
New York has joined a growing number of jurisdictions that sharply limit the use of credit information in employment. For most employers, credit history can no longer play a role in employment decision-making. Careful policy updates and training will be essential to avoid exposure under this newly expanded anti-discrimination framework.
If you have any questions regarding this article or any Labor or Employment law issue, please contact Ryan T. Biesenbach at (585) 258-2865 or rbiesenbach@underbergkessler.com.
